Allawi, a former physician who was forced into exile under the previous government of Saddam Hussein, also thanked America on behalf of the Iraqi people for the sacrifices of its armed forces in Iraq and the appropriation of billions of dollars in U.S. assistance.
Appearing in the House chamber before the assembled members of Congress and senior Bush administration officials, Allawi opened his 34-minute speech with an optimistic declaration that his government is making progress in building democracy and fighting insurgents.
"First, we are succeeding in Iraq," he said to enthusiastic applause. "It is a tough struggle with setbacks, but we are succeeding." He said Iraqis join the United States in mourning the "barbaric" murders of two American contractors who were beheaded this week by the group of Jordanian-born terrorist Abu Musab Zarqawi. "Yet as we mourn these losses we must not forget either the progress we are making or what is our stake in Iraq," Allawi said. "We are fighting for freedom and democracy -- ours and yours."
The interim prime minister, who took office at the end of June under a U.S.-backed transitional plan, met with Bush at the White House after his address to Congress.
Commenting on Allawi's appearance before Congress and on the situation in Iraq, Kerry denounced Bush's war leadership and said, "We need to change the course to protect our troops and to win."
He said, "The prime minister and the president are here obviously to put the best face on the policy." But reports from Iraq indicate that "we are losing the peace" and that Iraqi government authorities "have retreated from whole areas of the country," he said.
"You can't hold an election in a no-go zone," Kerry added.
Allawi told the joint session of Congress that he also wanted to convey a simple message: "Thank you, America." The members of the Senate and House rose to their feet and gave him a standing ovation as he stood at the podium with his right hand over his heart.
"I have come here to thank you and to promise you that your sacrifices are not in vain. The overwhelming majority of Iraqis are grateful."
He added: "My friends, today we are better off, you are better off, and the world is better off without Saddam Hussein. Your decision to go to war in Iraq was not an easy one, but it was the right one."
Allawi said his government's efforts to build democracy are opposed by a "tiny minority" of Iraq's 27 million people, a group that he said includes Hussein loyalists "who nurse fantasies" of his return to power, Muslim religious fanatics who have "a perverted vision of Islam" and "terrorists, including many from outside Iraq, who seek to make our country the main battleground against freedom, democracy and civilization."
In Iraq, he said, his government is confronting not only an insurgency, but "the global war on terror," with destructive forces that sometimes overlap.
"These murderers have no political program or cause other than push our country back into tyranny," he said. "There lies the fatal weakness. The insurgency in Iraq is disruptive but small, and it has not and will never resonate with the Iraqi people."
Allawi said his government has achieved successes in this battle behind what he described as gloomy media reports. He said government forces have ousted insurgents from Samarra and Tall Afar and overcome the occupation of Kufa and the holy city of Najaf by militiamen loyal to a radical young Shiite Muslim cleric.
"The next major milestone will be holding of the free and fair national and local elections in January next," Allawi said. "I know that some have speculated, even doubted, whether this date can be met. So let me be absolutely clear. Elections will occur in Iraq, on time in January, because Iraqis want elections on time," he said to a rousing ovation. "For the skeptics who do not understand the Iraqi people, they do not realize how decades of torture and repression feed our desire for freedom. At every step of the political process to date, the courage and resilience of the Iraqi people has proved the doubters wrong."
He said elections could be held "tomorrow" in 15 Iraqi provinces. He pledged that 30,000 polling sites would be established and that 130,000 election workers would be deployed to oversee the voting.
"We already know that terrorists and former regime elements will do all they can to disrupt these elections," Allawi said. The elections "may not be perfect," but "will be a giant step forward in Iraq's political evolution" and will lead to "a government that reflects the will and has the confidence of the Iraqi people," he said.
He urged the members of Congress not to let skeptics "convince others that the values of freedom, of tolerance and democracy are for you and the West, but not for us."
Staff writer Josh White contributed to this report.