In a televised ceremony at the White House on Tuesday, Bush awarded the Presidential Medal of Freedom to former CIA director George Tenet, retired general Tommy Franks and the erstwhile Iraq occupation administrator Paul Bremer.
The awards are controversial because all three figures are linked to an Iraq policy that has been highly unpopular around the world.
"This honour goes to three men who have played pivotal roles in great events and whose efforts have made our country more secure and advanced the cause of human liberty," the president said.
Bremer "will be remembered for his superb work in laying the foundations of a new democracy in the Middle East", said Bush, telling the diplomat: "Iraq is free today, and you helped make it so."
The president lauded Bremer for his service as the US occupation administrator of Iraq even though he presided over a 14-month post-war period fraught with anti-US violence.
Bremer has been heavily criticised for dissolving Iraq's army, which many feel fuelled the anti-US violence that has intensified in recent weeks as the country approaches elections scheduled for 30 January.
Bremer has been criticised for
disbanding the Iraqi army
More than 90% of the 1296 US war dead in Iraq were killed after Bush declared major combat operations at an end on 1 May 2003
As recently as Monday, Iraqi interim President Ghazi al-Yawir slammed what he called Bremer's big mistake, the abolishment of Iraq's defence ministry when he led the US-led occupying authority.
Merely ridding the military of Saddam Hussein loyalists "could have saved us a lot of hassle and a lot of problems" in dealing with deadly chaos that threatens elections scheduled for January, al-Yawir told BBC radio.
In his tribute to Tenet, Bush did not mention the intelligence failures leading to the 11 September 2001 attacks, or Tenet's reported remark that the weapons of mass destruction case against Iraq was a "slam dunk" - even though such arms have not been found.
Tenet, who was appointed CIA director by former President Bill Clinton, resigned for personal reasons in July.
Tenet resigned as CIA director in
July, citing personal reasons
However, Bush concentrated on Tenet's efforts to rebuild the CIA and called him "one of the first to recognise and address the growing threat to America from radical terrorist networks".
"More than three-quarters of al-Qaida key members and associates had been killed or detained and the majority were stopped as a result of CIA efforts," he said.
And in his tribute to Franks, Bush hailed the retired general's command of US forces in the wars to oust the Taliban from power in Afghanistan and topple Saddam in Iraq.
Iraq war criticisms
"One of the highest distinctions of history is to be called a liberator and Tommy Franks will always carry that title," said the president.
But the small size of the US-led invasion force in Iraq has been widely blamed for failing to secure the country once Baghdad fell - a point Bremer himself made in October, touching off an outcry over US strategy.
Defeated Democratic White House hopeful John Kerry also accused Franks of over-relying on Afghan troops in the siege of the Tora Bora cave complex in 2001, allowing al-Qaida chief Usama bin Ladin to escape.
Franks directed the US's attacks
on Afghanistan and Iraq
"My hunch is that George Bush was not using the same standard when honouring Tenet and Bremer that was applied to previous honorees," said David Wade, a spokesman for the former Democratic presidential nominee.
Past recipients of the award have ranged from former President Jimmy Carter to civil rights heroine Rosa Parks and US sports professionals, entertainers and academics.