The ISG report places pressure on Bush to find a way out of a war that has killed more than 2,900 US troops and thousands of Iraqis.
In a speech at a Washington think tank, al-Hashemi said any US timetable for withdrawal "can only be linked to serious efforts to reform the Iraqi military and security forces".
If the US withdrew without such an effort, he said: "The militia and militia-infiltrated government forces will escalate their massacre of innocent people. There will be a security vacuum. This will not lead to stability but further chaos.
"The United States has a duty to reform the Iraqi government forces because it was the United States forces which mistakenly dissolved the previous Iraqi military and security forces, so there was, more or less, an obligation, and created this security void now being filled with ... sectarian militias, terrorists and organised crime gangs."
Al-Hashemi was unsparing in his criticism of the US decision to disband the Iraqi army and other security forces after the March 2003 US-led invasion that toppled Saddam Hussein.
He said: "Imagine one day waking up and finding out that your nation's leaders had completely dismantled all police and military. As a result, there is not one policeman, or state, or federal law enforcement agent, or even one national guard or any soldier to protect you from criminal elements, or terrorists. It will be total chaos.
"Then imagine that instead of calling back the army and security forces, the authorities in this imaginary scenario decided to form a new army and police from racist militias, some mercenaries and organised crime gangs.
"With the new government-issued budget and government-issued vehicles, these armed groups begin arresting, torturing, murdering innocent people either because of their faith, or creed, or purely for profit.
"This is exactly what has happened in Iraq."
'Plan B' in Iraq
Al-Hashemi said he and Bush discussed the idea of a "Plan B" which would include a new political coalition including the powerful Shia Supreme Council for Islamic Revolution in Iraq, the Islamic party, which is the biggest Sunni bloc in parliament, and two Kurdish parties, in order to try to reduce the violence.
Sean McCormack, a state department spokesman, said the idea emerged from Iraqis and it was for them to decide.