President Bush says progress is being made in the reconstruction process in Iraq, as Iraqis reform their economy and rebuild their infrastructure. The president says this is a sign his strategy for victory is working.

President Bush says battlefield progress is not enough.

"Over the course of this war we have learned that winning the battle for Iraqi cities is only the first step," he said. "We also have to win the battle after the battle, by helping Iraqis consolidate their gains and keep the terrorists from returning."

The president says roads and schools must be built, there must be clean water and reliable electric power, and a business sector must take hold to create jobs and opportunity.

President Bush says this is happening in Iraq. He says security needs are diverting some resources from reconstruction. But he stresses there is progress none the less.

"Rebuilding a nation devastated by a dictator is a large undertaking," he said. "It is even harder when terrorists are trying to blow up that which the Iraqis are trying to build. The terrorists and Saddamists have been able to slow progress, but they have not been able to stop it."

In the second of a series of addresses prior to the December 15 Iraqi national elections, the president focused on two cities that were once sites of fierce fighting: Najaf and Mosul. He said once the insurgents were driven out, the process of reconstruction began

The president said in Najaf the transformation has been dramatic with schools, hospitals and even a local soccer stadium rebuilt, and essential services restored.

"One man from Najaf put in this way: 'Three years ago, we were in ruins, one year ago we were fighting in the streets, now look at the people shopping and eating and not in fear,'" he said.

Mr. Bush acknowledged that despite the progress there are still incidents of corruption and fraud. He said they are being addressed and noted the U.S. Embassy in Baghdad is demanding accountability for all money spent on reconstruction.

Recent polls indicate a growing unease in the United States about the cost of continued U.S. involvement in Iraq - both in terms of dollars and human lives. And the current series of presidential speeches on Iraq is seen in large part as an effort by the White House to shore up public support at a time when Mr. Bush's approval ratings are at the lowest point of his presidency.

On Capitol Hill, top Democrats in the U.S. Congress stress concerns about the Iraq situation are warranted.

House of Representatives Democratic Party leader Nancy Pelosi suggests the president is out of touch with reality in Iraq.

"This is again, not about politics," she said. "It is about the unity in our party saying that this is at the president's doorstep. From day one he has misled the American people. He either did not know what he was getting into or did not know how to go about it. He wanted to go to Iraq in the worst possible way and he did. And just because he says things are improving there, does not make it so."

Mr. Bush is expected to deliver a speech about the Iraqi political process on Monday.