The meeting in Washington took place amid continuing violence in Iraq, described by Bush as "unsettling".
"I believe is the unspoken subtext of that report is that progress in Iraq is beyond America's control"
AsparaGus, Pittsburgh, USA
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"It's bad in Iraq, " he acknowledged.
The Iraq Study Group, co-chaired by James Baker, the former secretary of state, and senior Democrat Lee Hamilton advised Bush to begin to withdraw US combat forces from Iraq by early 2008 to avoid "a slide toward chaos".
The report calls for a diplomatic push that would include Iran and Syria and a sustained US commitment to Arab-Israeli peace.
Bush said that he would only welcome Iran and Syria to group talks on Iraq if they agree to end support for extremists and to help Baghdad's fledgling government.
He said: "If people come to the table to discuss Iraq, they need to come understanding their responsibilities to not fund terrorists, to help this young democracy survive, to help with the economics of the country.
"And if people are not committed, if Syria and Iran [are] not committed to that concept, then they shouldn't bother to show up."
Mark Seddon, Al Jazeera's UN correspondent, said he suspected people in the Middle East who were waiting for something new would be slightly disappointed.
|Attacks and killings have become a part |
of daily life in Iraq
"Clearly the prime minister is prepared to engage with Syria and Iran if certain preconditions are met. And president Bush said the same, but its difiicult to see an enormous amount of movement frankly."
Jasim Azawi of Al Jazeera's Inside Iraq programme said talk of a regional solution from Bush and Blair will ultimately amount to nothing given the unrealistic expectation of all sides.
"The US wants something out of Iran and Syria and those countries cannot deliver it.
"I am afraid all this talk of a regional conference will amount to nothing - you can kiss it goodbye."
Bush noted that other studies were still under way by the Pentagon, the State Department and the White House National Security Council.
He said he would only make major policy decisions "after I get the reports".
He described the Baker-Hamilton report as "an important part of our deliberations and an important part of our discussions this morning".
At the same time, Bush said: "I don't think Jim Baker and Lee Hamilton expect us to accept every recommendation."
More than 2,900 US soldiers have been killed since the US-led invasion in 2003.
October, when 106 service members died, was the deadliest month for US troops in nearly two years. Tens of thousands of Iraqis have died.
The Iraq Study Group called on the US military to strengthen efforts to train Iraqi forces by boosting its forces embedded with Iraqi troops to 20,000 from about 4,000.