US President George W Bush [Images] cautioned his successor Barack Obama [Images] that the country still faced a "grave threat" of a terrorist attack but dismissed assessments that America's global moral standing was damaged during his presidency.

In his last formal news conference before demitting the White House on January 20 after a turbulent two-term presidency, Bush rejected critisism of his "war on terror" tactics and his policy on Iraq and on the economic crisis facing the nation. He said the president-elect will be facing an enemy that "would like to inflict damage" on Americans.        

Bush appeared indignant when asked about America's bruised image overseas in the aftermath of the invasion of Iraq."I disagree with this assessment that, you know, that people view America in a dim light, he said.

Bush said he realises that some issues such as the prison for suspected terrorists at Guantanamo Bay, Cuba, have created controversy. But he defended his actions after the September 11, 2001, terrorist attacks, including approving tough interrogation methods for suspected terrorists to protect the country.

Bush talked about threats posed by North Korea and Iran, members of what he once referred to as an "axis of evil." He said Pyongyang is "still a problem" - and that it is important that talks on that country's nuclear programme bring about a "strong verification regime." He also described Iran as "still dangerous".     

On Gaza, the US President said that a "sustainable ceasefire" could be accomplished only when "Hamas stops firing rockets into Israel."

Bush said that the "choice is Hamas' to make." He also stated that the best way to get a sustainable cease-fire is to "work with Egypt [Images] to stop the smuggling of arms into ... Gaza.      "Countries that supply weapons to Hamas have got to stop," he said.

Bush also said that "Israel has a right to defend erself." But he also said that Jerusalem should ensure that civilians are not hurt in the military operations.    

On Iraq, Bush also said he is not certain whether democracy will survive in Iraq.

The President defended his decision to send an additional 30,000 US troops to Iraq saying it has helped stabilise life in the war-torn country."The question is, in the long run, will this democracy survive, and that's going to be a question for future presidents," he said.

Bush called Obama "a smart, engaging person" and said he wishes his successor all the best.

He hinted at the huge responsibility the 47-year-old first Black-American US President-elect is about to assumewhen he enters the Oval office."There'll be a moment when the responsibility of the president lands squarely on his shoulders," Bush said.

When asked on his plans after leaving office, Bush said: "When I get out of here, I'm getting off the stage. I believe there ought to be one person in the Klieg lights at a time."

The President acknowledged that his "biggest mistake" in was "clearly putting a 'Mission Accomplished' [banner] on an US aircraft carrier. "It was a mistake," Bush said about how his administration handled the fall of Baghdad to U.S. troops. "It sent the wrong message," he said.