Hill, visiting Australia after attending the Pacific Islands Forum in Fiji last week, said a withdrawal of troops from Iraq, as urged by the opposition Labour Party, would damage the coalition.
"It is very important that we maintain this international coalition," Hill told the Australian Broadcasting Corporation.
"It was not an easy situation when Australia and the US went in there, it's not an easy situation now. I think now's the time when we really have to stick together and get through this.
"We know that you were in with us in the beginning and when we go out, we want to go out together."
Hill said that although Australia had fewer than a thousand troops in Iraq compared to about 140,000 from the US it would be "absolutely" a big deal in the US if Australia were to withdraw.
"We absolutely value the presence of the Australian troops," he said. "We appreciate the company, we really do."
Prime Minister John Howard, accused by the opposition of being Washington's lackey, has repeatedly said that to "cut and run" from Iraq would hand a victory to "terrorists".
Offering similar support to Howard when asked if Australia had been too heavy handed with its smaller Pacific Island neighbours in recent diplomatic clashes, Hill replied: "Well, tough love is a good thing."
Australia has been accused of bullying impoverished states such as the Solomon Islands and Papua New Guinea in order to get its own way, threatening to cut aid unless corruption is curbed and governance improved.
Hill told a meeting of the conservative Sydney Institute think tank later that after his visit to Fiji and the Pacific Islands Forum he believed Washington should do more to help Australia in the region.
"Australia has taken on a lot in the Pacific islands and I worry sometimes that the United States needs to be more engaged.
"If we do not address some of the problems in the Pacific island states, as small as they are, these problems could become rather large.
"When I see the Australians working in places like Fiji, I'm really reminded of the great importance of that work, of the need to try to make sure these countries are successful," he said.

Copyright AFP (Agence France-Presse), 2006