Angelina Jolie visits camp for internally displaced people in Iraq

"It is lacking in all of the basic things that you would need, they don't have," Jolie said. "They just started to have clean water. They're sleeping on dirt. They have built these areas out of brick by hand. They don't have job opportunities."

Jolie, on her third visit to Iraq as a U.N. High Commissioner for Refugees (UNHCR) Goodwill Ambassador, said she's seen some progress for these internally displaced Iraqis since she was last here in February 2008.

But in recent weeks the Iraqi government has taken on increased responsibility for controlling the violence that sent families from their homes, and U.S. troops have withdrawn from the cities.

"It is the most critical time," Jolie told CNN's Arwa Damon. "I think this will make the difference in the future of Iraq and in the future of a country that is so crucial to our world and our security and this region in the world. It is in the hands of the government to now really step up."