The report calls for talks between Israel and Syria as part of a US commitment to a comprehensive Arab-Israeli peace "on all fronts".
A Syrian cabinet minister welcomed the recommendations.
Buthaina Shabaan, the expatriates minister, said: "We welcome this report and regard it as a very important step.
"It means, God willing, the end of this era of American intervention in the region and the American occupation of Iraq, which brought catastrophic ramifications on the whole region."
The study group, led by James Baker, the former US secretary of state, proposed abandoning Bush's policy of trying to isolate Syria and Iran and resuming attempts to end the Arab-Israeli conflict, which Bush has given low priority.
The White House has previously ruled out one-on-one talks with Iran about Iraq unless Tehran suspends its uranium enrichment activities.
Jalal Talabani, the Iraqi president, took issue with the report's suggestion that Iraq's problems should be tackled from a regional perspective, with neighbours Iran and Syria playing a role.
He said: "We believe that Iraq's problems can be resolved by Iraqis alone."
Talabani said Iran and Syria's co-operation should be linked to practical issues such as securing border areas rather than on political issues.
"They should not get involved in the nuts and bolts of what is happening in Iraq," he said.
Talabani's son criticised the group's view that government control in Iraq should remain centralised rather than granting more power to the regions.
Qubad Talabani, who is the Kurdistan representative in Washington, said that the recommendation alarmed many in the Kurdish north who were pushing for more autonomy.
"Many of us feel that centralised tyrannies have led us to what we have today, which is a failed state," he said, adding that he was not speaking on behalf of his father.
The report said that oil revenues should be under central control from Baghdad: "The United States should support as much as possible central control by governmental authorities in Baghdad, particularly on the question of oil revenues."
Senior Iraqi oil industry officials have pressed for Iraq's national oil company to centralise revenue distribution, but Kurdish leaders have aggressively sought independent oil asset control, the report said.
The question remains over whether the White House will take on board all 79 recommedations in the report or if they will pick and choose what they want.
Baker said that all the recommendations are equally important and that he hopes that all recommendations will be considered and implemented.
John Rushing, Al Jazeera's military analyst, said that the report set aside a portion which is called "a new diplomatic offensive", which he said pertains to the Arab-Israeli conflict.
Rushing said: "This area of the report is significant because for once they are making a linkage between events in Iraq within a wider regional context.
"The US is seeing that they can not get support from key Arab allies unless they fulfill key critical issues that are important to these allies. If Syria agrees to co-operate in Iraq and in Lebanon, the report suggests that Syria will get the occupied Golan Heights back. This is a significant suggestion."
Speaking to Al Jazeera, Nir Rosen of the New American Foundation, said that there was one thing all parties could agree on and that was that the US military cannot win the war in Iraq.
He said: "It has to be won by the Iraqi government and Iraqi politicians, not the US military."