With recent polls showing the US public is losing faith in his handling of Iraq, the president said members of Saddam's Baath Party were trying to regain the privileged positions they had formerly enjoyed.
"The Baathists try to create chaos and fear because they realise that a free Iraq will deny them the excessive privileges they had under Saddam Hussein," Bush told a press conference at the White House in Washington on Tuesday.
The conference comes close on the heels of a spate of bombings in the Iraqi capital, Baghdad, on Monday which left at least 34 dead and 224 injured.
The US military confirmed today another soldier had been killed in a rocket-propelled grenade attack in Baghdad on Monday. Six other US troops were injured in the attack.
Conditions of fear
"The foreign terrorists are trying to create conditions of fear because they fear a free and peaceful state in the midst of a part of the world where terror has found recruits. That freedom is exactly what terrorists fear the most," Bush said.
He said the US would not be intimidated by attacks on civilians in Iraq.
"That freedom is exactly what terrorists fear the most"
"Desperate attacks on innocent civilians will not intimidate us," said Bush, adding, “we're now working with many nations to make sure Afghanistan and Iraq are never again a source of terror and danger for the rest of the world."
On the Middle East “road map” peace process, Bush avoided blaming Israel for stalled negotiations and focused all his complaints on the Palestinian "old guard", which he said was not showing enough commitment in the fight against “terrorism”.
Bush has seen his public approval ratings slide over the post-war violence, skyrocketing costs and the failure to find weapons of mass destruction.
A new CNN/USA Today/Gallup poll shows Bush's job approval rating at 53% compared to 42% who disapproved.
In a hypothetical match-up with an unnamed Democrat, Bush is the choice of 46%, while the president's rival was picked by 43%.
In contrast, after the 11 September 2001 attacks, Bush's approval ratings topped 80%.