Washington — Confronted by twin perils at home and abroad, George W. Bush faces a pivotal moment in his presidency Tuesday.

With the world increasingly unwilling to countenance war against Iraq and Americans increasingly dubious about his economic agenda, the U.S. President will attempt to reinvigorate his leadership with tonight's State of the Union speech.

If he fails to reassert the credibility of his bold agenda to battle international terrorism abroad and cure economic malaise at home, the 43rd U.S. President could suffer the same fate as his father, the 41st president: the heady highs of war-leader popularity followed by defeat over the economy.

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With allies enthusiastically backing Monday's report by United Nations weapons inspectors that said Iraq deserves more time to prove it has destroyed all weapons of mass destruction, the President must explain to Americans whether his "axis of evil" — Iraq, Iran and North Korea — still poses the grave and imminent danger he declared it did last year.

As sagging approval ratings starkly underscore, neither Mr. Bush's domestic agenda of massive new tax cuts that he says will kick start the economy nor his big-stick foreign policy — "Either you are with us, or you are with the terrorists" — enjoys the almost unqualified support that followed the Sept. 11 suicide hijackings 16 months ago.

Explaining the Iraqi threat to Americans rather than issuing an ultimatum to Baghdad is expected to be the focus of the foreign-policy dimension in tonight's speech.

"It will be a discussion with the public about why the President feels that peace is threatened by Saddam Hussein's relentless quest for weapons of mass destruction and why Hussein is such a risk when he is in possession of such weapons," a Bush administration official said Monday.

But the emphasis will be on domestic issues. "Most of the State of the Union will not be about Iraq," White House spokesman Ari Fleischer said. "Most of the State of the Union will be about improving America's economy and providing greater access to health care for millions of American people, including senior citizens."

Mr. Bush's proposed tax package, however, is already in trouble — it's widely seen as benefiting primarily the rich — and Democrats who failed miserably in November's midterm elections are floating attractive alternatives.

"For two years, America has given the President the benefit of the doubt on his economic plan," Nancy Pelosi, the Democrats' new leader in the House of Representatives, said Monday. "The American people have seen very few benefits and have a lot more doubt."

State of the Union speeches almost always give presidents at least a temporary boost in the polls. How long it lasts depends on whether the White House delivers on promises. So amid the hoopla, tonight's expected 50-minute address to both Houses of Congress will set out a series of presidential objectives.

With Republicans in control of both the Senate and the House of Representatives, the President won't be able to blame partisan opposition if he fails to deliver.

"Our nation faces many great challenges all at once," he said on the weekend, underscoring both the challenge for his speech and his administration. "We will meet all of them with courage and steady purpose."

The speech, which will be as closely watched in Baghdad and Berlin as across the United States, will be delivered at a time when Mr. Bush is facing a much messier future than a year ago. Then, as the leader of a nation still reeling from terrorist strikes, the President mapped out a world neatly divided into good and evil.

Now, with allies abroad and political adversaries at home challenging the President to prove his case against Iraq and prominent members of his own party unwilling to embrace his economic agenda, Mr. Bush faces a skeptical world and a range of growing problems at home.

"What we are getting from the White House are confused signals instead of clear direction, slogans instead of solutions, posturing instead of progress," South Dakota's Tom Daschle, the Minority Leader in the Senate, said Monday as Democrats launched a pre-speech attack. "There's a name for all of this. It's called a credibility gap."

With an approval rating at midterm of 60 per cent, Mr. Bush is still flying historically high. Only John Kennedy, in the year he was assassinated four decades ago, enjoyed a higher second-year rating among elected presidents since approval polling began in the 1940s.

Still, the doubts are growing. Polls show Mr. Bush's approval rating on a steady slide and it now hovers about the level it was just before Sept. 11, 2001.

Most worrisome for the White House is that a solid majority of Americans now believe the President should be doing a better job handling the economy.

But with defence and homeland-security spending soaring, proposed tax cuts and a sputtering economy slashing government revenues, a new era of big deficits looms.