Bush’s first visit to the kingdom came as his administration notified Congress of its intent to sell US $20 billion in weapons, including precision-guided bombs, to the Saudis. The announcement was timed to coincide with the President's arrival in the Saudi capital.

It is “a pretty big package, lots of pieces”, US National Security Advisor Stephen Hadley told reporters on Air Force One.

The sale is an important part of the US strategy to bolster the defences of its allies in Saudi Arabia and other oil-producing majority Sunni Muslim Gulf nations against threats from Shiite Iran.

The official announcement will start a 30-day review period during which Congress could try to block the sale, which has raised concern among some lawmakers.

Saudi Arabia and other Gulf states harbour deep suspicions about Iran’s apparent designs to establish itself as a major power and have reacted sceptically to the conclusions of intelligence estimate about Iran.

Bush, who flew to Riyadh from Dubai, was to meet with King Abdullah. The King was expected to urge Bush to keep up the pressure on Israel to halt settlements in Palestinian territories. The administration was able to persuade the Saudis to participate in the US-sponsored peace conference in Annapolis, in November. Bush also has promoted democratic principles during his trip.

While Abdullah has tried to push some reforms on education and women’s rights, and there have been limited municipal council elections, the King has been cautious and limited in his efforts. He apparently has been hampered by others in the royal family worried that fast changes could upset the country’s conservative clerics and citizens.

Earlier, in Dubai, Bush got a flavour of the cosmopolitan banking and business hub, his second stop in the seven-state UAE federation.

After watching a group of girls dancing rhythmically to Arabic music, Bush had lunch with students of the Dubai School of Government, a research and teaching institution that focuses on public policy in the Arab world. The President and his hosts sat on cushions, set in a circle, their food in bowls on the floor before them.

“I’m most impressed with what I’ve seen here. The entrepreneurial spirit is strong, and equally importantly, the desire to make sure all aspects of society have hope and encouragement,” Bush later told a gathering of entrepreneurs.

“I also want you to understand something about America - that we respect you, we respect your religion and we want to work together for the sake of freedom and peace,” Bush told the group.

Dubai, concerned about being a target for Islamic extremist terrorism that has hit other nations in the region, has installed one of the world’s most comprehensive homeland security and anti-terrorism systems. Many anti-terror analysts believe the threat in Dubai is growing — fueled by the city’s image as a bastion of Western-style capitalism, its new status as home to the world’s tallest building and the frequent port calls by US Navy ships.

Dubai has a powerful Iranian business community, and the West, led by the US, is cracking down on business in and out of Iran to protest against its nuclear ambitions. Dubai is caught in the middle — eager to maintain its lucrative business with Iran, but wary of angering the US and the UN.