President Bush has defended his decision to go to war in Iraq and pressed the case for democracy in the Middle East.

In an unflinching speech on Wednesday, George W Bush insisted that the coalition had to act to remove Saddam Hussein.

But he signalled that his administration wanted to pursue a multilateral foreign policy to resolve the world's problems.

"In Iraq year after year the dictator was given the chance to account for his weapons programmes and end the nightmare for his people. Now the resolutions that he defied have been enforced," he said.

"Who will say that Iraq was better off when Saddam Hussein was strutting and killing or that the world was safer when he held power?"

The president also renewed his commitment to stay in Iraq despite the rising number of terrorist attacks.

"Our will is firm, our word is good and the Iraqi people will not surrender their freedom," he told an audience at the Banqueting House.

"Whatever has come before, we now have only two options: to keep our word or break our word. The failure of democracy in Iraq would throw its people back into misery."

He pledged to find a solution in the Middle East to help the Palestinian people who had been "betrayed by others for too long".

"We must shake off decades of failed policy in the Middle East," he said.

The US leader warned that the global threat of terrorism required a global response.

"It's not enough to meet the dangers of the world with resolutions. We must meet them with resolve," he said.

"The greatest threat of our age is the threat of nuclear, chemical or biological weapons in the hands of terrorists."

The US president insisted the terror threat remained high across the globe.

"The hope that danger has passed is comforting, it is understandable and it is false," he said.

Bush went on to defend the "restrained use of force" as a way of protecting democracy from violence and chaos.

"History has shown that there are times when countries must use force to defend the peace and to defend values," he said.

On the opening day of his state visit the president also mounted a stout defence of the special relationship between his country and the UK.

Britain was America's "closest friend in our world", he said.

"The United States and Great Britain share a mission in the world beyond the balance of power or the simple pursuit of interest We seek the advance of freedom and the peace that freedom brings," said the president.

"Together, our nations are standing and sacrificing for this high goal in a distant land at this very hour.

"America honours the idealism and bravery of the sons and daughters of Britain."

And the president said he was committed to a multilateral foreign policy - denying that Britain and the US had lost confidence in the United Nations.

"The United States and Great Britain have laboured hard to help make the United Nations what it is supposed to be - an effective instrument of our collective security," he said.

In a coded warning to his critics in Europe, Bush went on to warn against the belief that the world could sort out all its problems through dialogue.

"European countries now resolve differences through negotiation and consensus there is sometimes an assumption that the entire world functions in the same way," said the president.

"But let us never forget how Europe's unity was achieved: by Allied armies of liberation and NATO armies of defence.

"And let us never forget beyond Europe's borders where oppression and violence are very real, liberation is still a moral goal and freedom and security still need defenders."