Mr. Bush conceded in a speech that deep differences remain over Iraq, even among staunch war allies, the United States and Britain.
But, he asserted, "we did not charge hundred of miles into the heart of Iraq and pay a bitter cost of casualties and liberate 25 million people only to retreat before a band of thugs and assassins."
His speech followed an elegant welcoming ceremony with Queen Elizabeth II at Buckingham Palace, which included a 41-gun salute and a review of troops on foot and on horseback.
Meanwhile, anti-war protesters made preparations for huge demonstrations against Mr. Bush's 3 1/2-day state visit.
Earlier, President Bush marked the start of his visit with a ceremonial welcome that had all the pageantry afforded high-ranking dignitaries with one exception: there was no carriage ride that traditionally marks state visits because the security risk was judge to be too great.
There were isolated, smaller demonstrations around the city on Wednesday. At one point, as the president's motorcade arrived at Banqueting House for his speech, noisy demonstrators could be seen and easily heard just two blocks away. The demonstrators, held back by police lines, could not be heard inside the hall where Mr. Bush spoke.
Mr. Bush acknowledged differing views about U.S.-led involvement in postwar Iraq, but said, "Whatever has come before, we now have only two options: To keep our word or to break our word."
"Failure of democracy in Iraq would throw its people back into misery and turn that country over to terrorists who wish to destroy us," Mr. Bush told about 400 foreign policy experts and invited guests.
He was warmly received with applause.
Mr. Bush asserted that there are times, as with Saddam Hussein in Iraq, when "the violent restraint of violent men" is justified.
"In some cases, the measured use of force is all that protects us from a chaotic world ruled by force," he said.
Mr. Bush said he still strongly supports international organizations, like the United Nations, which he bypassed in going to war in Iraq. But he said the United Nations must be willing to enforce its own demands — or lose its relevancy.
Turning to the Middle East, Mr. Bush cited several months of "setbacks and frustrations."
He said European leaders "should withdraw all favor and support from any Palestinian leader who fails his people and betrays their cause," an apparent reference to Palestinian leader Yasser Arafat.
Bush urged Israel to end the "daily humiliation" of Palestinians and not to undercut peace prospects "with the placements of walls and fences."
Also on Wednesday, Bush met with leaders of Parliament and some relatives of the 67 British victims of the Sept. 11, 2001, attacks in the United States. On Thursday, Bush meets with British Prime Minister Tony Blair, whose close support of Bush on Iraq has drawn rising public opposition in Britain.
"It really is about time we started to realize who our allies are, who our enemies are, stick with the one and fight the other," Bush told the House of Commons earlier. His remarks drew loud applause.
Bush and first lady Laura Bush were guests of honor at a white-tie state dinner Wednesday night, held in room with cathedral ceilings at Buckingham Palace, where the Bushes were staying during the visit. Oversized paintings and tapestries covered the walls and the deep red carpet matched roses that overflowed from tables set with china, flatware and glasses dating to the time of King George IV in the early 1800s.
"You led the response to an unprovoked terrorist attack, which was on a scale never seen before," the queen said in toasting Bush. "... Our two countries stand firm in their determination to defeat terrorism."
Demonstrators gathered behind metal barriers near the palace, watched by large numbers of yellow-jacketed police officers. As darkness fell, police scuffled with some of the several hundred demonstrators who assembled outside the palace and banged drums, blew whistles and charged "Bush go home!"