"Retreat in the face of terror would only invite further and bolder attacks," Bush told the American Legion military veterans group. "There will be no retreat.”
Faced with calls by lawmakers of both parties to significantly increase troop levels in Iraq, Bush said he would challenge more countries to join the US-led occupation forces.
The challenge comes on the day when US fatalities in postwar Iraq exceeded invasion death toll figures.
After Bush's speech, two US senators said the president failed to adequately address what was at stake.
"This is going to take years and hundreds of billions of dollars ... and hundreds of thousands of troops to sustain this effort," Nebraska Republican Senator Chuck Hagel said on PBS's NewsHour.
"The president ... must come before the American people and say that."
West Virginia Democrat Senator Robert Byrd said the Iraq war stimulated recruitment by resistance groups and wrote in a Washington Post editorial on Tuesday that the situation in Iraq continued to "spiral out of control".
He urged Bush give other countries real participation in Iraq's reconstruction.
To date, any new UN mandate on troop recruitment has been stalled by US refusal to give the international body more decision-making powers in Iraq.
Bush also said he would work with Congress to provide the needed resources for the occupation.
Policing a nation that does not
want you there is increasingly
However,US authorities in Iraq have all but exhausted the seized assets they have used to pay occupation administrators and civil servants.
US Treasury Department spokesman Tony Fratto said a final cash shipment of $419 million would be made in the next week from a New York Federal Reserve account.
This account once held $1.7 billion, but next weeks transfer will "nearly exhaust the available vested funds."
The White House is under mounting pressure from Republicans and Democrats in Congress to act and act fast.
No more money
Major revenue sources, chief among them oil production and international aid, have yet to materialise.
Representative James Kolbe, an Arizona Republican who chairs the foreign aid subcommittee put a brave face on the situation.
"Yes, the seized assets are nearly exhausted, but there are some other sources of funds to pay salaries to Iraqis."
But one senior congressional aide, who asked to remain anonymous, said: "It's a mess. Seized assets are down to almost nothing and oil money is a mirage in the near term."