Bush has been widely accused of intruding into Australian politics after saying that Latham's policy would be "disastrous" for the "war on terrorism".
But Latham, who had answered the attack only with a brief press statement, told reporters on Sunday that he was not worried about the criticism and was standing by his policy.
He said the government's Iraq policy had failed and had put Australians at greater risk of attacks, as well as diverting resources from what he described as the real priority of dismantling al-Qaida and finding Usama bin Laden.
"They are the things I'm worried about and the reason why we need alternative strategies to avoid the terrible mess the Howard government has helped to create in Iraq," Latham said.
Whether the criticism by the US president had harmed him politically was a matter for the commentators, he said.
"One thing about the Labor Party - we make policies in Australia's national interest, always Australia first."
Howard, who was with Bush in Washington when the attack was launched, said in an interview recorded in Britain and aired on Sunday that he did not know whether the attack would create a backlash against his conservative Liberal-National coalition.
"I have never looked at the polls when it comes to Iraq," he said.
"I've taken a position that has been out of favour at various stages because I believe in it very strongly and I will continue to maintain that position, irrespective of what the opinion polls say."
Howard, whose government faces elections by the end of this year, repeated his declared view that winning a fourth term of government is going to be very tough and his government is clearly the underdog.