More than 2,000 Iraqis were questioned in all 18 provinces
The survey by the BBC, ABC News and NHK of more than 2,000 people across Iraq also suggests that nearly 60% see attacks on US-led forces as justified.
This rises to 93% among Sunni Muslims compared to 50% for Shia.
The findings come as the top US commander in Iraq, Gen David Petraeus, prepares to address Congress.
He and US Ambassador to Iraq Ryan Crocker are due to testify about the effects of the surge and the current situation in Iraq.
The poll suggests that the overall mood in Iraq is as negative as it has been since the US-led invasion in 2003, says BBC world affairs correspondent Nick Childs.
The poll was conducted in more than 450 neighbourhoods across all 18 provinces of Iraq in August, and has a margin of error of + or - 2.5%.
It was commissioned jointly by the BBC, ABC and Japan's NHK.
It is the fourth such poll in which BBC News has been involved, with previous ones conducted in February 2004, November 2005 and February 2007.
It was commissioned with the specific purpose of assessing the effects of the surge as well as tracking longer term trends in Iraq.
Between 67% and 70% of the Iraqis polled believe the surge has hampered conditions for political dialogue, reconstruction and economic development, according to the August 2007 findings.
Only 29% think things will get better in the next year, compared to 64% two years ago.
The number of people wanting coalition forces to leave immediately rose since February's poll but more than half - 53% - still said they should stay until security improved.
The survey reveals two great divides, our correspondent notes.
First, there is the one between relative optimism registered in November 2005 and the gloom of this year's two polls.
In between, there was the deadly bombing of the Shia mosque in Samarra, which unleashed a bitter and deadly sectarianism. [Apparently for the BBC, the insurgent attacks on Iraqi Shia before February 2006 were not bitter or deadly sectarianism! ]
The other great divide is the one now revealed between the Sunni and Shia communities.
While 88% of Sunnis say things are going badly in their lives, 54% of Shia think they are going well.
'Good for Baghdad'
Dr Toby Dodge, who was involved in running the poll, pointed to the fact that so many Iraqis saw no improvement to their safety since the US deployed an extra 30,000 troops this year, bringing their number up to nearly 170,000.
"I think that's a damning critique and an indication of the pessimism and the violence on the ground," he told the BBC's Radio Five Live.
Iraqi Prime Minister Nouri Maliki insisted on Monday that the surge had had a positive effect in the capital, Baghdad, at least.
Violence had dropped 75%, he told the Iraqi parliament, without giving figures.
At the same time, he warned that Iraqi forces were not ready to take over security from the US military which had, he said, "helped... in a great way in fighting terrorism".