Petraeus recommended that troop withdrawals from Iraq be paused for 45 days after July when U.S. forces in Iraq will be reduced to140,000.
But both Petraeus and Bush are uncommitted to further withdrawals.
The war in Iraq has claimed more than 4,000 U.S. lives and cost an estimated 600 billion U.S. dollars since 2003.
It is widely unpopular at home, with a CNN poll in March showing about two-thirds of the country opposes the conflict.
U.S. military leaders have also warned the war has left the service "out of balance," with troops strained by extended deployments and equipment worn by exposure to harsh desert conditions.
The president's announcement came after he met with Petraeus and Ryan Crocker, U.S. ambassador to Iraq in the White House.
In the speech, Bush also said Iraqi forces are increasingly capable of fighting extremists.
"American and Iraqi forces have made significant progress," Bush said, noting that sectarian violence is "down dramatically."
He said many mainstream Sunnis and Shiites are fighting the extremists who want to provoke sectarian violence.
"Serious and complex challenges remain in Iraq, from the presence of al-Qaida to the destructive influence of Iran to hard compromises needed for further political progress," he said.
"Yet with the surge a major strategic shift has occurred. ... today we have the initiative," said Bush.
(Xinhua News Agency April 11, 2008)
