Donald Trump's new immigration order will remove Iraq from the list of countries whose citizens face a temporary US travel ban, according to officials.
Four officials said the administration's decision follows pressure from the Pentagon and State Department.
They had urged the White House to reconsider Iraq's inclusion given its key role in fighting the Islamic State group.
It is designed to replace an earlier order blocked by federal courts.
The officials said six countries - Iran, Libya, Somalia, Sudan, Syria and Yemen - will remain on the travel ban list.
Mr Trump is expected to sign the executive order in the coming days.
The new order includes other changes. The officials said the 12-page document no longer singles out Syrian refugees for an indefinite ban and instead includes them as part of a general,120-day suspension of new refugee admissions.
The officials also said the order will not include any explicit exemption for religious minorities in the countries targeted by the travel ban. Critics had accused the administration of adding such language to help Christians get into the US while excluding Muslims.
Mr Trump signed his original executive order in late January. It sparked immediate confusion, panic and outrage as some travellers were detained in US airports before being sent back overseas and others were barred from boarding flights at foreign airports.
The government initially blocked US green card holders before offering those legal residents special permission to come into the country. It finally decided the order did not apply to them.
The State Department provisionally revoked about 60,000 valid visas before a federal judge in Washington state blocked the government from carrying out the ban. The 9th US Circuit Court of Appeals upheld that decision.
Under the revised order, officials said, all existing visas will be honoured.
The changes follow a report by intelligence analysts at the Homeland Security Department, which found insufficient evidence that citizens of the seven Muslim-majority countries posed a terror threat to the US.