Bush spoke at an air force base in Charleston a day after the city hosted a Democratic presidential debate in which calls for a US troop withdrawal from Iraq were a common theme.
Faced with a new poll showing anti-war sentiment on the rise, Bush cited newly declassified intelligence as he gave an impassioned response to criticism that the US focus on Iraq has become a distraction from the wider war on terrorism.
''Al Qaeda in Iraq is a group founded by foreign terrorists, led largely by foreign terrorists and loyal to a foreign terrorist leader: Osama bin Laden,'' Bush told a audience made up mostly of military personnel and their families.
''They know they're al Qaeda, the Iraqi people know they're al Qaeda, people across the Muslim world know they're al Qaeda,'' he insisted.
Mindful of his trouble selling the US public on the war, Bush has worked harder to put the spotlight on al Qaeda, the Islamist group behind the September. 11 attacks on the United States and whose leader, bin Laden, has eluded a US-led manhunt.
But some war critics have accused him of overstating the connections between al Qaeda and Iraq-based militants in an attempt to de-emphasize the role of sectarian fighting in the country's turmoil and justify the US military presence there.
Pressure on the Bush administration has intensified ahead of a September. 15 progress report that opposition Democrats and increasing numbers of the president's fellow Republican see as pivotal in deciding the future US course in Iraq.
Bush Warns Against Early Pullout
Bush described al Qaeda in Iraq as a ''full member of the al Qaeda terrorist network'' and reiterated his longstanding argument that an early withdrawal would allow the group to use the country as a safe haven for exporting violence.
''Fighting could engulf the entire region in chaos and we would soon face a West Asia dominated by Islamic extremists who would pursue nuclear weapons and use their control of oil for economic blackmail or to fund new attacks on our nation,'' he said.
Al Qaeda in Iraq has claimed many of the worst attacks there since the 2003 US-led invasion, but secular fighting between majority Shi'ites and minority Sunnis has also been responsible for a large share of the bloodshed.
Bush's remarks followed an intelligence report last week warning that the United States faces an increased threat of further attack from al Qaeda, which is said to have become entrenched in Pakistan's tribal region near Afghanistan.
Democrats seized on the findings to say the administration has mishandled national security and the Iraq war.
A Washington Post/ABC News poll released yesterday showed that 80 per cent of Americans view Bush as too inflexible on the Iraq war a rise of 12 points since December and most prefer that Congress have the final word on deciding when to withdraw forces.