Bush granted the general, who seized power in a 1999 coup, a striking personal endorsement during a coveted visit to his retreat in the Maryland hills, which has hosted former world leaders including Margaret Thatcher and Mikhail Gorbachev.

He lauded Musharraf as a "courageous leader" who had offered "essential" help in the US anti-terror campaign, promising to work with Congress on an economic and military aid package and to sign investment pact with Islamabad.

Musharraf, matching Bush's informal style in a blazer, slacks and no tie, said Pakistani people "abhor terrorism in all its forms and manifestations" and made a pitch for the kind of long-term US-Pakistani friendship which has previously failed to blossom.

The Pakistani leader has faced increasing US pressure to cut down incursions by Islamic militants into Indian Kashmir -- penetrations that his arch-rivals in India brand as state-sponsored terrorism.

He thanked Bush for US efforts to defuse tensions with India, "aimed at the resolution of all outstanding issues, including the core issue of Jammu and Kashmir."

Bush meanwhile delivered ringing praise to his visitor, which will be closely noted by India, a traditionally US ally.

"President Musharraf is a courageous leader and a friend of the United States," Bush said at a joint press conference at the sun-baked retreat north of Washington.

"Pakistan's support was essential in our campaign against the Taliban," said Bush, a year-and-a-half since offering Musharraf little choice but to ditch its backing for the Afghan militia which harbored the al-Qaeda network, following the September 11th attacks.

"Pakistan has apprehended more than 500 al-Qaida and Taliban terrorists, thanks to the effective border security measures and law enforcement cooperation throughout the country and thanks to the leadership of President Musharraf," Bush said.

The invitation to Camp David, considered more significant than a standard White House visit, is seen as reward for Musharraf's help in tracking down the network's kingpins, including its number-three, Khalid Sheikh Mohammed, picked up in Rawalpindi on March 1.

Bush, who earlier this month met Indian Deputy Prime Minister Lal Krishna Advani at the White House, said he was "encouraged" by signs of diminising tensions between nuclear ricals India and Pakistan.

"I'm hopeful that the two countries will deepen their engagement on all issues, including Kashmir," Bush said.

The US leader, also gently pressed Musharraf to make good on his promises of democratisation.

Achieving "moderation and progress" in Pakistan will require "movement toward democracy," he said.

Washington has wiped out more than a billion dollars in Pakistani debt since coralling it as an anti-terror ally. On Tuesday Bush promised more help to the struggling Pakistani economy.

"I will work with the United States Congress on a three billion assistance package to help advance security and economic opportunity for Pakistan's citizens," Bush said, and pledged to sign a Trade and Investment Framework Agreement -- the first step in expanding bilatarel trade ties.

But he said that 28 F-16 fighters, which Pakistan has already paid for but which were snared by 1990s anti-nuclear sanctions would not be handed over.

He said Musharraf had been a "strong advocate" for the sale of F-16s to Pakistan, but added "in the package that we discussed, the five year, three billion dollar package, half of that money goes for defense matters, of which the F-16 won't be a part."

Bush has established a clear pecking order for visiting foreign leaders.

Closest presidential buddies get to tour the president's beloved Crawford, Texas ranch. Australian Prime Minister John Howard and Spanish Prime Minister Jose Maria Aznar have signed the guest book in recent months.

One step down, but still coveted by foreign leaders is the invitation to Camp David, a camp of log cabins set in Maryland's rolling Catoctin mountains, shaded by maple and oak trees.

WAR.WIRE