A US led assault on Fallujah is set to provide a tense backdrop to talks between President Bush and Tony Blair later this week.

The prime minister heads to Washington for talks on Thursday and Friday, with the situation in Iraq and the Middle East set to top the agenda.

American and Iraqi forces were on Monday beginning their long anticipated assault on the rebel stronghold of Fallujah.

Speaking after interim Iraqi prime minister Iyad Allawi gave the go-ahead for operations in Fallujah, Blair said the military campaign was of "fundamental importance" to British security.

"Defeat for terrorism in Iraq is defeat for this new and virulent form of terrorism everywhere," he said.

"A democratic Iraq is the last thing the terrorists want to see. It is precisely for that reason, because victory for the terrorists would damage security round the world including  here in Britain, that we have to hold firm, be resolute and see this through, including in Fallujah."

Blair said the action in Fallujah would "cease immediately" if the terrorists would lay down their weapons and participate elections.

"They are fighting to stop democratic elections, supervised by the United Nations, due to take place in January," he said.

Push begins

Marines were initially reported to have taken the western outskirts of the town, and secured the main hospital.

Fears that military action against the town will prove a bloodbath for civilians and troops alike has been behind backbench Labour criticism of the decision to deploy Black Watch troops to central Iraq.

With three fatalities and two serious injuries already resulting from two separate suicide bomb attacks on the UK forces stationed at Camp Dogwood, there is concern the death toll will continue to grow.

Further deaths would add to the pressure on Blair, fuelling unease among Labour MPs already dismayed by the re-election of President Bush.

And military experts say the toughest fighting is yet to come, with the Marines poised to push on into the main part of the city on the east bank of Euphrates River.

With the fighting set to continue over coming days, the prospect of mounting causalities will hang over the talks between the two leaders.

Middle East

Number 10 will be hoping for a further commitment from the US to push for a peace deal between Israel and the Palestinians.

Asked on Monday whether the Middle East would be topping the agenda at the summit, the prime minister's official spokesman pointed to Tony Blair's Labour conference speech and his recent comments following the US election outcome in which he stressed the importance of a deal.

Number 10 said the summit would provide a "clear statement of intent" on the peace process.

"Given the length of the US election process it was inevitable that things would be on hold," the spokesman said.

"The most important thing first of all is to get some momentum back into the process

"Let nobody pretend we haven't been thinking about this and planning for a very long time," he added.

"We are not starting with a blank page.

"There is a difference between what is said publicly on these occasions and what is going on behind the scenes."

Road Map

With Yasser Arafat remaining critically ill and Israel pushing ahead with its Gaza pullout, tensions in the region remain high, with the Road Map to peace effectively sidelined at present.

Downing Street insisted the "Gaza withdrawal is only the first step and Road Map is very much still there".

But the spokesman dampened expectations that a major initiative would be unveiled.

"You have to establish the framework and then move within that framework," he said.

Signs of genuine progress over the coming months would go some way to easing the criticism of the close relationship Blair has formed with the American leader.

On Sunday there was a hint from former president George Bush senior, who said the current president would be "a willing and able partner" in the push for a peace deal.

Downing Street also confirmed that Iraq and EU/US relations would be on the agenda, but that "the discussion will go wherever it goes".

Voice

Meanwhile, opposition parties have warned the prime minister he must make Britain's voice heard in the Oval Office.

Shadow foreign secretary Michael Ancram renewed the Conservative attack on the current state of relations with the US.

"In the past it has been clear that Tony Blair has consistently failed to put Britain's case to President Bush and has merely followed his lead," he said.

"Given President Bush's clear majority and strengthened position, this must be the moment when the British prime minister ensures that Britain's voice is not only heard loud and clear, but is also given good account."

Charles Kennedy, the Liberal Democrat leader, said Blair must act as a wise counsel in the US.

"The pessimists say this means the neo-conservatives are going to move in and take over the White House," said Kennedy.

"The optimists among us must hope that he seizes this big opportunity, not least where the Middle East is concerned, to try and break the deadlock.

"The forces are perhaps conspiring to give him that possibility and anything the British prime minister can do to ease them down that path has to be in all our interests and in the long-term interests of the United States itself."