"I want to see a democratic Iraq," Mr Howard told ABC Radio.
The US-led military coalition in Iraq has been criticised heavily by a host of detractors including leading US military officials, human rights groups and opposition political parties.
Mr Howard said his belief in the war had only strengthened as the conflict continued.
"None of us want to stay in Iraq any longer than necessary, but if the coalition were to pull out of Iraq now it would be an unqualified victory for the terrorists and that unqualified victory would be used as a recruiting argument by the terrorists."
Labor has promised to pull troops out of Iraq if it wins government next year, a plan condemned by Mr Howard.
"If it's good enough for Australia to go, it must, by any test of fairness and logic, be good enough for the Americans and British to go," he said.
The Prime Minister said the details of Iraqi democracy were something to be worked out by the Iraqi government although a single state was his preference rather than splitting the country along ethnic and religious lines into separate entities.
"I think there are great advantages in having a single state," he said.