WASHINGTON (AP) – President Bush said Thursday that a bipartisan panel’s call for a major course change in Iraq was an important document, but just one of several reports he will consider as he charts a new strategy.

Standing alongside chief Iraq war ally Tony Blair, the president acknowledged that, “It’s bad in Iraq.”

Both Mr. Bush and Mr. Blair agreed that success in Iraq may depend on victory over extremists across the broader Middle East.

The two leaders met a day after the Iraq Study Group headed by former Secretary of State James A. Baker III and former Democratic Rep. Lee Hamilton issued a report saying their war policies had failed and a major course correction was needed, including beginning to withdraw combat troops.

Asked at a joint news conference when the president would start to carry out recommendations for a change, Mr. 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 make major policy decisions “after I get the reports”

He called the Baker-Hamilton report “certainly an important part of our deliberations and an important part of our discussions this morning.”

At the same time, Mr. Bush said, “I don’t think Jim Baker and Lee Hamilton expect us to accept every recommendation.”

Mr. Baker did say, earlier Thursday, he believes the study “is probably the only bipartisan report he’s going to get and it’s extremely important that we approach this issue in a bipartisan way.”

The report, which contains 79 separate recommendations, says that Mr. Bush’s Iraq policy is not working, warns the situation in Iraq is “grave and deteriorating” and calls for most US combat troops to be withdrawn by early 2008.

Mr. Bush said he is planning to deliver a major speech to outline his decision for a new way forward.

“I think you’re probably going to have to pay attention to my speech coming up here when I get all the recommendations,” Mr. Bush said in a joint news conference with the British prime minister.

“I do know that we have not succeeded as fast as we wanted to succeed. I do understand that progress is not as rapid as I had hoped. And therefore it makes sense to analyze the situation and to devise a set of tactics and strategies to achieve the objective that I have stated,” the president said.

“It’s a tough time and its a difficult moment for America and Great Britain and the task before us is daunting,” Mr. Bush said, even as members of the bipartisan commission were testifying on their report on Capitol Hill.

Mr. Bush asserted that success in Iraq depends on victory over extremists across the “broader Middle East,” apparently subscribing to one of the conclusions of the Baker-Hamilton report.

Mr. Blair, who has stood shoulder to shoulder with Mr. Bush since the March 2003 invasion of Iraq, said he welcomed the conclusions of the Iraq Study Group despite its criticism of past policies that both he and Mr. Bush advanced.

It “offers a strong way forward,” Mr. Blair said.

“The consequences of failure are severe,” he added.

Mr. Bush appeared to endorse the panel’s conclusion that any resolution of the Iraq conflict is tied to reducing tensions between Israel and the Palestinians and across the broader Middle East – a position Mr. Blair has long held.

But in Tel Aviv, Prime Minister Olmert said he disagreed with the advisory group’s linkage. He told a news conference that conditions were not ripe to reopen long-dormant talks with Syria.

“I appreciate your clear view that we are confronted with a struggle between moderation and extremism and this is particularly evident in the broader Middle East,” Mr. Bush told Mr. Blair.

Both Mr. Bush and Mr. Blair said that supporting the government of Prime Minister al-Maliki was central to efforts to help Iraq defend, govern and sustain itself.

“The American people expect us to come up with a new strategy,” Mr. Bush said.

“I believe we need a new approach and that’s why I’ve tasked the Pentagon to analyze the way forward,” he said. In addition to the Iraq Study Group, studies are under way at the Pentagon, State Department and National Security Council on next steps.

The response made it clear that Mr. Bush did not intend to be influenced only by the bipartisan panel’s report, which contained 79 specific recommendations, but by the other studies as well.

One of the study group’s central recommendations was for the administration to reach out to Syria and Iran for help in stabilizing Iraq, a course Mr. Bush has rejected in the past.

“Countries that participate in talks must not fund terrorism, must help the young democracy survive, must help with the economics of the country,” Mr. Bush said. “If people are not committed, if Syria and Iran is not committed to that concept, then they shouldn’t bother to show up.”

For his part, Mr. Blair suggested that Iran’s support for Shiite militants in southern Iraq presented a problem. “Iran has been…basically arming, supporting, financing terrorism,” the visiting British leader said.

Mr. Blair said the terrorists’ threat in Iraq is part of an old pattern that is region-wide. Terrorism “has basically come out of the Middle East” and must be addressed in a way that includes a solution to the Palestinian-Israeli conflict, he said.