"Nonetheless, the term 'civil war' accurately describes key elements of the Iraqi conflict, including the hardening of ethno-sectarian identities, a sea change in the character of the violence and population displacements."
However, Robert Gates, the US defence secretary, dismissed the characterisation of the fighting in Iraq as a 'civil war'.
"I think that the words 'civil war' oversimplify a very complex situation in Iraq," he said at the Pentagon.
"I believe that there are essentially four wars going on in Iraq. One is Shia on Shia, principally in the south.
"I think that the words 'civil war' oversimplify a very complex situation in Iraq"
Robert Gates, US Defence Secretary
The second is sectarian conflict, principally in Baghdad but not solely.
"Third is the insurgency, and fourth is al-Qaeda.
"It's not, I think, just a matter of politics or semantics. I think it oversimplifies. I think it's a bumper-sticker answer to what's going on in Iraq."
The new intelligence estimate said violence between Sunnis and Shias was being driven by increasing polarisation within Iraqi society.
It said the current problems were compounded by weakness within Iraq's security forces and the government of Nuri al-Maliki, Iraq's prime minister.
"Unless these efforts to reverse these conditions show measurable progress during the term of this estimate, the coming 12 to 18 months, we assess that the overall security situation will continue to deteriorate at rates comparable to the latter part of 2006," the 90-page document said.
It also said Iraqi security forces, particularly the Iraqi police, will experience difficulty in undertaking security responsibilities and maintaining independence from Shia militias.
Meanwhile in Iraq, the US military said a helicopter went down on Friday.
It is the fourth such loss in Iraq in a fortnight.
Major David Small, a spokesman at US Central Command (Centcom), said he had no details on possible casualties.
He also possessed no information on what mission the helicopter was supporting, nor how many were in the crew.
Two military helicopters and one civilian helicopter have crashed in Iraq in the past month.
All were believed shot down, although the US military has not confirmed that the losses resulted from such a situation.