The prime minister and the president have held an hour long meeting at which Iraq, world trade, HIV and the Middle East peace process topped the agenda.

The serious business got underway on Thursday when Tony Blair and George W Bush met in Downing Street.

The second day of the US president's state visit was followed by a joint press conference at the Foreign Office.

Bush pledged that the two countries would "meet the new challenges" of the 21st century.

It is thought that talks on the future of Iraq dominated the discussions.

Following the terror attacks in Istanbul the prime minister said his resolve was undiminished.

"It is in a free, democratic and stable Iraq that not just the violence, but the wretched and backward philosophy of these terrorists will be defeated and destroyed," he said.

The prime minister revealed discussions had also covered HIV and Aids, weapons of mass destruction, the Middle East and the peace process and world trade.

"Since we have successive G8 chairmanships in the next couple of years we discussed how we can take forward world trade," Blair said.

Officials have been downbeat on the prospects of today's meetings producing any tangible results.

Both men made clear there would be no immediate announcement on the fate of the British prisoners held at Camp Delta.

"We are in discussion at the moment. It's not going to be resolved today but it will be resolved soon," said Blair.

"It's got to be remembered it arose out of the battle in Afghanistan. The very fact that we are in discussion, that there are fair procedures for trial is an indication that we treat people differently."

President Bush echoed his sentiments. "These are illegal non-combatants picked up off the battlefield. They are being treated in a humane fashion," he said.

A deal on the illegal US steel tariffs failed to materialise and Blair sought to strike a conciliatory note.

"It's immensely important, whatever the disagreements on trade between Europe and America...to remember trade between Europe and America is absolutely vast," he said.

"I think its fair to say it's doubled since 1989. It amounts to a huge amount of money and jobs."

Following the meeting the prime minister said two communiqués will be issued by the British and US governments.

Blair later held lunch with the president before convening a meeting of NGOs to discuss the Aids crisis in Africa.