"The situation in Afghanistan is serious," McChrystal said, and success "demands a revised implementation strategy, commitment and resolve, and increased unity of effort."
McChrystal did not ask for more troops but is expected to do so in a separate request in a couple weeks, two NATO officials said on condition of anonymity because they were not authorized to speak on the matter. NATO nations have repeatedly declined U.S. requests to send larger numbers of new troops or to lift restrictions on many of those now fighting in Afghanistan.
Defense Secretary Robert Gates said Monday that the Obama administration will look closely at the "resources requests" expected to flow from McChrystal's assessment. Gates said the review's hard look at the U.S. military's performance contains bright spots amid "gloom and doom."
"We have been very explicit that General McChrystal should be forthright in telling us what he needs," Gates said following a tour of the Texas factory where next-generation F-35 fighter jets are built and tested.
U.S. officials are bracing for a troop request above the 21,000 new American forces President Barack Obama committed to Afghanistan this year. That would force an unpleasant choice on Obama: Add more troops to Afghanistan just as the strain of the huge force commitments to the Iraq war begins to diminish, or risk losing the war he had argued the United States neglected in favor of Iraq.
There is little appetite at the White House and in Congress for further expansion of a war that is backsliding despite nearly eight years of fighting and millions in development money.
U.S. and NATO commanders have said they do not have sufficient troops and support to expand the fight against a resilient and well-organized Taliban insurgency. But Gates noted his oft-repeated worry about placing too many forces in Afghanistan, a strategy that failed for the Soviet Union in the 1980s.
"I think there are larger issues," Gates said. "We will have to look at the availability of forces; we will have to look at costs. There are a lot of different things we will have to look at."
McChrystal's recommendations were being sent up through U.S. Central Command commanders, including Gen. David Petraeus, who would add their comments to it. Pentagon spokesman Bryan Whitman would not say whether Gates had seen it yet, but said the report would not be made public, calling it confidential.
Whitman said McChrystal's assessment would not include specific recommendations for additional troops or funding. "They'll be addressed in the future," he said.
In Brussels, NATO spokesman James Appathurai said the report would also be examined by NATO's political and military leadership. He stressed it was an assessment by the commander of NATO forces in Afghanistan, "not a change of strategy."
McChrystal's report recommends focusing the U.S. and NATO counterinsurgency efforts on the Afghan population and less on militants, one of the NATO officials in Afghanistan said.
Last week, McChrystal said troops "must change the way that we think, act and operate" in newly released counterinsurgency guidance. McChrystal hopes to instill a new approach in troops to make the safety of villagers the top priority.
McChrystal said the supply of fighters in the Afghan insurgency is "essentially endless," the reason violence continues to rise. He called on troops to think of how they would expect a foreign army to operate in their home countries, "among your families and your children, and act accordingly," to try to win over the Afghan population.
The deaths of two U.S. service members Monday in the south - the country's most violent region - underscored the escalating violence.
"While there is a lot of gloom and doom going around, I think that General McChrystal's assessment will be a realistic one, and set forth the challenges we have in front of us," Gates said. "At the same time, I think we have some assets in place and some developments that hold promise."
Gates requested the report as a gut check following Obama's announcement of a pared-down counterinsurgency strategy and the rare wartime firing of a top general this spring. McChrystal was sent to Afghanistan this summer to oversee the addition of 17,000 U.S. combat forces on Obama's orders, on the way to a record U.S. commitment of 68,000 by the end of this year.
In total, there are more than 100,000 U.S. and NATO troops in the country. There were roughly 250,000 international forces in Iraq at the height of that war.
The allied strategy in Afghanistan hinges on increasing the number of Afghan soldiers and police so U.S. forces can one day withdraw. Some 134,000 Afghan troops are to be trained by late 2011, but U.S. officials say that number will need to be greatly increased, an expansion that the U.S. will finance.
Explosions killed two more U.S. troops, raising the record death toll in August to 47 - the deadliest month of the eight-year war for American forces.
Gates said he is concerned about the growing casualties caused by roadside bombs or "improvised explosive devices," a weapon borrowed from the war in Iraq. Gates said he wants to send additional armored vehicles to protect troops in Afghanistan and more surveillance equipment to scout out bombs and bombers.
About nine in 10 battle casualties in Afghanistan are now caused by IEDs.
Gates was in Texas to see the first batch of F-35 stealth fighter jets, designed to be cheaper and more flexible than big-ticket weapons systems such as the F-22 fighter that has not been used in Iraq or Afghanistan.
After touring the Lockheed Martin Corp. plant where the $100 million F-35s are built, Gates got a first look at the MC-12 Liberty, a relatively low-tech answer to the problem of airborne surveillance in Afghanistan. The first of the planes are already flying in Iraq, and will soon be sent to Afghanistan.