Change in stance
The Bush administration has previously resisted calls by members of congress and by a bipartisan Iraq review group to include Iran and Syria in diplomatic talks on stabilising Iraq.
Rice said it was the Iraqi government inviting Iran and Syria to participate, with the US in support.
"We hope that all governments seize this opportunity to improve their relations with Iraq and to work for peace and stability in the region"
Condoleezza Rice, US secretary of state
The Iraqi government announced in Baghdad that it is preparing the meeting for mid-March.
Syria will be represented at the conference by Ahmed Arnous, an aide to the foreign minister, an Iraqi foreign ministry official said, speaking on condition of anonymity because the plans had not yet been formally announced.
Other Arab countries and Iran have not confirmed their attendance or the level of delegates they would send.
Others invitees include members of the Arab League and the five permanent members of the UN Security Council.
Rice's announcement comes in spite of the US's ongoing confrontation with Iran over its nuclear programme.
US officials say Iran is seeking to develop nuclear weapons, while Tehran says its enrichment programme is for domestic energy.
A UN Security Council deadline for Tehran to suspend uranium enrichment has just expired, and the US wants the council to expand the limited sanctions the world body has imposed on Iran.
Speaking about the US shift in policy, Tony Snow, the White House press secretary, told reporters the Bush administration is "happy that the government of Iraq is taking this step and engaging its neighbours. And we also hope and expect that Iran and Syria will play constructive roles in those talks."
However, Snow said the agenda "is being set up by the government of Iraq. And the conditions, especially for bilateral conversations with the Iranians, are pretty clear".
The Bush administration in recent weeks had increased its public criticism of Iran's role in Iraq, charging it with supplying deadly weapons, including advanced technologies for the most lethal form of roadside bombs.
It has also accused Syria of harbouring anti-Iraqi government forces and allowing weapons to cross its border.