WASHINGTON (AFP) - The conflict in Iraq has all the makings of a civil war, which can nonetheless be avoided, according to a new U.S. Defense Department report to Congress.

"Conditions that could lead to civil war exist in Iraq. Nevertheless, the current violence is not a civil war, and movement toward civil war can be prevented," said the quarterly Pentagon report.

"Concern about civil war within the Iraqi civilian population and among some defense analysts has increased in recent months.

"The security situation is currently at its most complex state since the initiation of Operation Iraq Freedom," the report said.

In the past three months, "the average number of weekly attacks increased 15 percent over the previous reporting-period average, and Iraqi casualties increased by 51 percent compared to the previous quarter," it said, noting most of the violence occurred in Baghdad.

Release of the report on Iraq, where 138,000 U.S. troops are fighting, comes as the administration of President George W. Bush launches a new spin campaign to put a better face on the increasingly unpopular war before November legislative elections.

"The alarming report indicates that the number of attacks against Americans and Iraqis is higher than ever," House Minority Leader Nancy Pelosi said in a statement.

"The war in Iraq is the wrong war, a reality that no amount of White House rhetoric can distort," the Democratic representative said.

Bush recently raised the stakes of the ideological war over Iraq and flatly refused to withdraw, likening the war in Iraq to the battle against Nazism and fascism.

"We're not leaving so long as I'm the president. That would be a huge mistake," said the president, whose job approval ratings have sunk partly because of the war.

Vice President Dick Cheney, Defense Secretary Donald Rumsfeld, and U.S. Secretary of State Condoleezza Rice have already fired the Republican administration campaign's opening salvos, giving speeches accusing Bush's critics of failing to understand the terrorist threat to the United States.

Other opposition Democrats also seized on the Defense Department report.

"The Pentagon's new report today indicates that President Bush, Vice President Cheney and Secretary Rumsfeld's speeches are increasingly disconnected from the facts on the ground in Iraq," Senate Democratic Leader Harry Reid said in a statement.

"Even the Pentagon acknowledges Iraq is tipping into civil war," he said.

Since its last report, the Pentagon report said, "the core conflict in Iraq changed into a struggle between Sunni and Shia extremists seeking to control key areas in Baghdad, create or protect sectarian enclaves, divert economic resources and impose their own respective political and religious agendas.

Death squads and terrorists "are locked in mutually reinforcing cycles of sectarian strife," the Pentagon said.

"The Sunni Arab insurgence remains potent and viable, although its visibility has been overshadowed by the increase in sectarian violence.

"The death of terrorist Abu Musab al-Zarqawi in June was a major success for the (US-led) Coalition and the government of Iraq, but Al-Qaeda in Iraq remains able to conduct operations due to its resilient, semi-autonomous cellular structure of command and control," the report said.