Though popular in Lebanon, the US views Hizb Allah as a terrorist organisation and blames it for launching attacks against Israel.
"I would hope that Hizb Allah would prove that they are not [a terrorist group] by laying down arms and not threatening peace," Bush said on Tuesday with Jordan's King Abd Allah at his side.
He said a major concern, discussed with the Jordanian king, was that the group may try to derail the peace process between Israel and the Palestinians.
But in a possible olive branch to the group, Bush pointedly noted that "Hizb Allah has been declared a terrorist organisation by the United States because of terrorist activities in the past".
The organisation in Lebanon is also a political party with deputies in the Lebanese parliament.
White House spokesman Scott McClellan later said "it would change the dynamic if they disarmed".
He said Syria's first phase of a troop withdrawal from Lebanon was encouraging but that all the troops and intelligence personnel needed to be gone as soon as possible to allow Lebanon to have parliamentary elections in May free of outside interference.
"We view Hizb Allah as a terrorist organisation and I would hope that Hizb Allah would prove that they are not by laying down arms and not threatening peace"
US President George Bush
The US president and the Jordanian king discussed the Middle East peace process. Bush said each side needed to make sacrifices in the quest for peace, and raised some eyebrows by saying "Israel must withdraw from the settlements".
McClellan said there was no change in policy, that Bush was referring to Israeli Prime Minister Ariel Sharon's overall withdrawal plan. The United States is calling for a freeze in Jewish settlement activity.
Meanwhile, leader of the Lebanese Progressive Socialist Party Walid Jumblatt demanded that Hizb Allah explain why a photo was displayed during its recent demonstrations in Nabatiya, portraying Jumblatt as a Jewish rabbi, Aljazeera has learned.
A senior party official told Aljazeera's correspondent in Beirut that Jumblatt would not continue dialogue with Hizb Allah unless a satisfactory explanation was given to him.