The United States is ready to make a "sustained commitment" to a post-war Iraq similar to the commitment it made to Germany and Japan after the Second World War, President George Bush declared last night. He also told Israel that as the peace process resumed with the Palestinians, it "must end" settlement activity in the occupied territories.

In a major speech setting out his vision of Iraq and the Middle East after President Saddam had been driven from power, Mr Bush told a conservative think tank in Washington that a new regime in Baghdad could be a "dramatic and inspiring example of freedom" to other nations of the region.

Setting out for the first time his vision of Iraq after President Saddam has been driven from power, Mr Bush told a conservative think tank in Washington that a new regime in Baghdad could be a "dramatic and inspiring example of freedom" to other nations of the region. It might also bring closer the prospect of peace between Israel and the Palestinians.

The task, he warned, would not be easy, and would require "a sustained commitment from many nations, including our own". But that was "no excuse to leave the Iraqi regime's poison labs and torture chambers in operation".

His speech, to the American Enterprise Institute, served a double purpose: an attempt to defuse charges he is no more than a warmonger, and to convince sceptics at home and abroad that the US would follow through in Iraq, in a way that would not simply add to the instability of the region.

As such, it is further confirmation that the US is determined to oust Saddam Hussein. Washington reinforced that message by rejecting a Canadian compromise to bridge differences on the United Nations Security Council, by giving President Saddam an end-of-March deadline to disarm. Such a delay would be just "procrastination", a State Department spokesman said.

The speech also addressed short-term humanitarian measures required after the overthrow of President Saddam, to cope with millions of refugees and provide adequate food for a civilian population subject to severe rationing even before the outbreak of war.

The emergence of a peaceful Iraq, purged of Saddam's tyranny, could rekindle progress towards a "final status" agreement between Israel and Palestine, and what Mr Bush called a "democratic" Palestinian government, which definitively abandoned terror. In return, Prime Minister Ariel Sharon "will be expected to support the creation of a viable Palestinian state", the President said.

But indications are that argument persists among the President's top advisers ­ along now-familiar lines. While hardliners such as Vice-President Dick Cheney and Donald Rumsfeld, the Defence Secretary, talk of "transition" ­ implying America will pull out as soon as a satisfactory new government has been installed ­ the State Department under General Powell has placed the emphasis on "transformation", accepting that America had to be in Iraq for the long haul.

Mr Bush appeared to come down in the latter camp ­ despite intense scepticism that the "new Iraq" can ever be attained, given the country's ethnic and religious fractures.