Washington: Amid escalating violence across Iraq, US President George W Bush has acknowledged that his country faced "serious" challenges in the war-ravaged country but said the coalition would finish its work by implementing a clear strategy.

"On the ground in Iraq, we have serious and continuing challenges. Illegal militias and remnants of the regime, joined by foreign terrorists, are trying to take by force the power they could never gain by the ballot."

"These groups have found little support among the Iraqi people," Bush said in his comments which came exactly a year after his declaration that major combat operations in Iraq had ended.

"Despite many challenges, life for the Iraqi people is a world away from the cruelty and corruption of Saddam's regime and we will finish our work because the stakes for our country and the world are high," he said in his weekly radio address to the nation today (May 1, 2004).

He said the US-led coalition is implementing a clear strategy in Iraq. It will "ensure an atmosphere of security" for the handover of limited power on June 30. "Our coalition supports the efforts of local Iraqis to negotiate the disarmament of the radicals in Fallujah."

Addressing the problems facing coalition forces, Bush said he was prepared to let local Iraqis negotiate the disarmament of "radicals" in the city of Fallujah while insisting that militias in the city of Najaf and elsewhere "must disarm or face grave consequences".