President Bush is meeting with Republican and Democratic leaders of Congress Friday, as he considers a new strategy for Iraq.
Thursday at the White House, Mr. Bush said the situation in Iraq was "bad" and that a new approach was needed.
Speaking after talks with British Prime Minister Tony Blair, Mr. Bush said his decisions will be based on the recommendations of separate studies conducted by the Defense Department, State Department and National Security Council as well as the Iraq Study Group. The bipartisan group released its report on Wednesday.
The president said he will seriously consider the group's report, but refused to accept all its suggestions.
Regarding the suggestion of holding direct talks with Iraq's neighbors - Iran and Syria, Mr. Bush said Tehran and Damascus must first stop funding terrorists and pledge support for the Iraqi government and economy.
The president previously has rejected talks with Iran and Syria.
President Bush announced that Mr. Blair will travel to the Middle East soon to meet with Israeli and Palestinian officials.
The U.S. State Department says Secretary of State Condoleezza Rice plans to return to the Middle East early next year. A spokesman said it is important for Rice to remain actively engaged in the region.
The Iraq Study Group recommends broader regional diplomatic initiative to stabilize Iraq, including new efforts to resolve the Arab-Israeli conflict.
The panel also recommends that the U.S. military change its primary mission in Iraq from combat to support, and calls for pulling out most U.S. combat troops by early 2008.
Some information for this report was provided by AFP, AP and Reuters.