Washington- US President George W Bush and Italian Prime Minister Silvio Berlusconi met on Monday vowing to take steps to prevent broader economic fallout caused by the financial crisis and to ensure US and European government continue to cooperate.

"These are tough times for our economy yet we can be confident that we will work our way through these challenges," Bush said on Columbus Day at the White House, where he was to later host Berlusconi for an official state dinner.

The two leaders and close allies met after a series of weekend meetings of international finance officials in Washington to explore ways to stave off a worldwide recession following the near collapse of the finance market.

"We are in a crisis, in a global crisis which has never happened before in the world economy," Berlusconi said through a translator, expressing confidence the crisis will be overcome.

Bush met with finance officials from the world's seven leading democratic economies on Saturday known as the G7 and with the broader G20 on Sunday. Bush welcomed the "bold" move endorsed by the nations to respond to the crisis.

The Bush administration has launched a massive 700-billion-dollar rescue plan of the nation's financial sector, which, after more than a week, appears to have restored some confidence on Wall Street. The stock market plunged at a record pace during the last week, but as of mid-day on Monday was posting a large gain.

Bush and Berlusconi also discussed the war on terrorism, the conflicts in Iraq and Afghanistan, the dispute with Iran over its nuclear activities and Russia's conflict with Georgia.

Italy has more than 2,000 soldiers in Afghanistan under NATO command and had helped train Iraq's security forces. Berlusconi, during his first stint as prime minister, strongly backed Bush's decision to invade Iraq in March 2003.

Bush praised Berlusconi for his efforts to lift restrictions the Italian government places on the role of its troops in Afghanistan, limiting them to peacekeeping operations in relatively safe areas of the country while US and other NATO forces are fighting a resurgent Taliban in southern and eastern Afghanistan.

France, Germany and Spain also restrict to their troops to non- combat roles.

The two leaders agreed that Iran cannot be permitted to obtain nuclear weapons and called for the enforcement of three rounds of UN Security Council sanctions on the Islamic state for its refusal to halt uranium enrichment, Bush said.

Bush and Berlusconi expressed support for Georgia in its dispute with Russia over the breakaway regions of South Ossetia and Abkhazia, saying the provinces must remain part of Georgia. Moscow launched a massive military assault against Georgia after the former Soviet state retaliated against separatists rebels in South Ossetia. The Kremlin's campaign was condemned by the European Union and United States.

"To earn the respect of the international community, Russia must show respect for the sovereignty and territory of its neighbors," Bush said. (dpa)