Visiting US President George W. Bush was expected to meet with his closest ally British Prime Minister Tony Blair at Downing Street on Thursday morning, reportedly for talks that focus on winning peace in Iraq.

Both Bush and Blair are grappling with the political fall-out of almost daily deadly guerrilla attacks on the coalition forces in Iraq, and their talks were expected to hammer out details on stepped up plans to transfer sovereignty in Baghdad on June 30 next year.

"Obviously Iraq would be a topic which would be discussed when the prime minister and the president met...It would be all the more significant in the light of events at the weekend regarding the Iraq Governing Council's (IGC) timetable," Blair's official spokesman told reporters.

The IGC last Saturday endorsed a US plan that would create a provisional, sovereign government by the end of June next year.

At that point, the occupation would end and the Coalition Provisional Authority (CPA) would be dissolved. Following that, elections for a new government would be held by the end of 2005.

Amid speculation that the US administration was considering a U-turn on Iraq in terms of its desire to speed up the transfer of power to the Iraqi people, both Britain and the United States have said their determination and resolve to ensure a free and prosperous Iraq remain absolutely undiminished and they would hand power to the Iraqis as quickly as possible.

As violence still rumbles in Iraq more than 6 months after the United States announced that major military campaign in the country was over, both Bush and Blair want a credible new strategy on Iraq that would help them step out of the Iraq dilemma, local analysts said.

Bush, who came here on Tuesday evening for a three-day state visit, defended his Iraq policy on Wednesday by claiming that the coalition would help Iraqis build a "peaceful" country and democracy would succeed in Iraq.

In a speech to an invited audience at Banqueting House, Bush also urged Europe to put aside bitter war disagreement with the United States and work to build democracy in the country or risk returning Iraq to terrorists.

Blair, the staunchest US ally on Iraq, was also expected to use his talks with Bush to press for progress on the British prisoners at the Guantanamo Bay, including an undertaking that detainees would be allowed to appeal to civilian courts, local reports said.

Another fractious issue that was likely to crop up during the two leader's talks would be the recent British support for a strengthened European Union defense capability, which Washington feared would undermine the North Atlantic Treaty Organization (NATO).

Blair, who has insisted it is important for Britain to maintain both alliance with America and membership of the European Union, stressed in a speech one week before Bush's visit that greater EU cooperation on defense matters would not undermine NATO, and Britain would not let NATO lose its status as the primary source of territorial defense for Western Europe.

The Iran nuclear row, the Middle East peace process, EU-American relations, the steel tariffs would also be high on the agenda of the two leaders.

As Bush's state visit was entering its second full day, analysts said the high level visit by an American president could only call attention to Blair's unwelcomed cozy relationship with Bush.

A recent British opinion poll found that about 60 percent of British people believed that Britain does not benefit from the close relationship between Bush and Blair.

Both Bush and Blair have paid heavy political prices for going to war against Iraq without approval from the United Nations and then failing to find Iraq's alleged weapons of mass destruction, a major justification for the US-led military campaign in Iraq.

Domestic popularity of them has fallen, their names have been reviled by anti-war protesters around the world, and their relations with some European allies such as France and Germany, have cooled due to the dispute over Iraq.