The two sides will also work out how many of the current 160,000 US troops are to remain in Iraq and the legal framework under which they will operate, the White House said.
“The two negotiating teams, Iraq and the United States, now have a common sheet of music with which to begin the negotiations,” he said in Washington.
Lute said the bilateral agreements will not contain timetables for withdrawing US forces from Iraq, a move Bush continues to resist.
He added that it was important for neighbouring countries to know that the US considers Iraq a key factor in regional stability.
Iraqi officials said that under the proposed formula, US troops would relocate to bases outside the cities while Iraq would get full responsibility for internal security.
While Maliki said any final deal would require the Iraqi parliament’s approval, Lute said the accord would not need backing from the US Congress.
Iraqi officials told the Associated Press news agency they foresee a long-term presence of about 50,000 US troops.
The US state department is to negotiate with the Iraqi side early next year in talks that are planned to end around July.
Al-Maliki also announced that he would ask the UN for a final renewal of its security mandate, stressing the importance of ending it in 2008.
Ali al Dabbagh, the Irqai government spokesman, told Al Jazeera: “The presence of the American troops will be as much as the Iraqi security forces need them for training, for equiping, for manning.
“[After July] There will be a bilateral arrangement with the American forces to regulate their presence there, and they will be fully under Iraqi control,” Dabbagh said.
Democratic Party Congressional leader Nancy Pelosi on Monday criticised Bush for planning to leave US forces mired in Iraq after his presidential term ends in January 2009.
“President Bush’s agreement … confirms his willingness to leave office with a US army tied down in Iraq and stretched to the breaking point, with no clear exit strategy from Iraq,” Pelosi, the speaker of the House of Representatives, said in a statement.
“The president should take responsibility for his Iraq policy rather than expect the American people or the next administration to bear the consequences of his mistakes.”
At least tens of thousands of Iraqis and more than 3,800 US troops have been killed since the March 2003 US-led invasion of Iraq.