The US military death toll last month fell to 63, the lowest since September 2006 when 61 were killed, and the number of civilian casualties dropped by half compared to the previous month, according Iraqi government statistics.

"In past years we had been seeing a peak in violence leading up to Ramadan and in beginning of Ramadan," said Lieutenant General Raymond Odierno, the number two commander in Iraq, referring to the Muslim holy month.

"This year we've seen the opposite. We've seen a decrease in attacks running up to Ramadan," he said.

Odierno said he was encouraged by the downward trend in attacks over the past three and a half months, which he attributed in part to the "surge" in US forces, which sent 30,000 extra soldiers earlier this year.

"One (reason) is Al-Qaeda in Iraq has lost significant capacities," he said, adding that it is "no longer capable to lead as many attacks as they used to. The surge has disrupted the terrorists and their freedom of movement."

Other factors have been the greater engagement with Sunnis and Shiites who are now ready to work with US forces, and a growing rejection of extremist groups by Iraqis, he said.

"To have further reduction, in my opinion, it is now about basic services," he said.

He said the government needed to distribute electric power, fuel and food more efficiently and without a sectarian bias.

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