Hoshyar Zebari was responding to a vote in the US House of Representatives making further funding of the war conditional on a withdrawal timetable.
The top US general in Iraq said there was still "vastly more work" to do.
The Senate votes on the bill later on Thursday. President George W Bush has promised to veto it.
| This is part of the politicking, basically, in Washington Hoshyar Zebari, Iraq foreign minister |
Although the Democrats, who sponsored the bill, control both houses of Congress, they do not have enough votes to overrule a presidential veto.
The Democrats have been locked in confrontation with President Bush's Republicans over the future of the war in Iraq.
Mr Zebari said the bill was "part of the politicking, basically, in Washington, and this has been damaging in fact to the security, political development, not only in Iraq, but in the entire region".
He said a decision to withdraw US troops "should depend on conditions on the ground".
"The moment that Iraqi forces, security, military, are self-reliant, capable of standing on their own, defending their own country, providing security, then definitely there would be a way for the troops to leave."
'Surrender date'
The commander of US forces in Iraq, Gen David Petraeus, has met US politicians to argue against the bill.
He is overseeing the "surge" strategy, in which thousands of extra US troops are being poured into Baghdad in an attempt to pacify the Iraqi capital.
He did not give a direct opinion on the bill at a press conference in Washington on Thursday, but said the US effort "clearly is going to require an enormous commitment over time".
He said the first few months of the surge had led to improvements in Iraq, but said it had still to get fully into its stride, and admitted that progress was "often eclipsed by sensational attacks which overshadow our achievements".
He described the situation there as "exceedingly complex and very tough", and said "there is vastly more work to be done across the board".
The Democrats' bill provides $100bn (£50bn) in new war funds, if troops start leaving in October, with the withdrawal planned to be complete by March 2008.
In other developments in Iraq:
- The commander of a major US military prison in Baghdad, Lt Col William Steele, is arrested on suspicion of offences including aiding the enemy
- Ten Iraqi soldiers are killed and 15 people injured in a suicide car bomb attack on an Iraqi army checkpoint in the town of Khalis
- In Tikrit, gunmen kill the sister-in-law and niece of Ali Hassan al-Majid, the genocide suspect better known as Chemical Ali
- Three people are killed in an attack outside Kurdistan Democratic Party offices in Mosul