European and American leaders meet in Washington on Thursday amid growing tensions over US plans to extend the war on terror to Iraq.

On the agenda will be the Bush administration's decision to impose damaging tariffs on European steel imports and the continuing conflict between Israel and the Palestinians.

Spanish prime minister, Jose Maria Aznar, and European Commission president, Romano Prodi, will meet president Bush in the White House Oval Office.

The EU commissioners Chris Patten, and Pascal Lamy, together with Javier Solana and Spanish foreign Minister Joseph Pique will also participate.

On the American side the high-level delegation includes vice president Dick Cheney, secretary of state Colin Powell, attorney general John Ashcroft, trade representative Bob Zoellick, national security adviser Condoleezza Rice and White House chief of staff Andrew Card.

Both sides have agreed that they want the summit to be, in Pique's words, "a clear example of the special and ever-closer relationship which must exist between the United States and the EU".

But ahead of the summit, Commission chief Romano Prodi warned that America should avoid taking action on Iraq that could split the coalition formed to back the war in Afghanistan.

"The coalition the United States put together after September 11 has been a great example of political intelligence, and it is quite clear that it is so precious that we should do nothing to harm it," he warned on Tuesday.

European leaders will also be stressing the need to continue the search for a peace agreement between the Israeli's and the Palestinians.

"I'm going to urge president Bush to use his influence to persuade prime minister Sharon and his government to pull out their forces from all occupied territories and give their full co-operation to the international community," says Prodi.

But with indications that the US will back-peddle on earlier support for a United Nations investigation of events in Jenin, in return for an Israeli U-turn on lifting the siege of Yasser Arafat's Ramallah compound, the EU's chances of achieving much change in the American position appear limited.

The "quartet" of the EU, US, UN general secretary Kofi Annan and Russian foreign minister Igor Ivanov will meet after the summit to discuss the situation in the Middle East.

But the "war on terror" will continue with close cooperation on measures to tackle the financing of terrorism. Work is going ahead to improve the efficiency of transatlantic joint action against terrorism.

The EU delegation will also be expressing its disappointment about the US decision to impose tariffs on steel imports.

Prodi has said the EU is "disappointed" by the move, but despite private anger the Commission's public line is that commercial disputes will arise from time to time between the two trading blocs.

But EU national leaders have backed the Commission's position of establishing safeguard measures and starting proceedings before the World Trade Organisation.

Also on the agenda will be the issue of non-proliferation and disarmament, where the EU has called for US engagement with multilateral institutions.

"The EU will pursue intense, at times difficult, consultations with the US on these issues that are crucial to reducing regional tensions and increasing global security," says the Commission.

Sustainable development and the Kyoto Agreement - which the US has rejected - will also be discussed, along with the situation in the Balkans and relations with Russia.