SYDNEY : US President George W. Bush met with his close ally Australian Prime Minister John Howard on Wednesday to discuss military and security ties, as the US military chief in Iraq hinted at a troop reduction.

Howard, who has deployed about 1,500 troops to operations to support the increasingly unpopular war and has refused to set any date for troop withdrawals, greeted his friend warmly as the pair met in his Sydney office.

Iraq and other security issues are expected to dominate their talks that took place ahead of the Asia-Pacific Economic Cooperation summit in Sydney.

The meeting comes as the US military commander in Iraq, General David Petraeus, hinted he may recommend a reduction of US troops by March 2008, echoing similar remarks by Bush on a surprise trip to the country on Monday.

"There are limits to what our military can provide, so my recommendations have to be informed by - not driven by, but they have to be informed by - the strain we have put on our military services," Petraeus said.

Asked if troops could be drawn down in March 2008, the general said: "Your calculations are about right."

Bush and Howard are expected to sign an agreement which grants the Australian military greater access to classified information on US weapons, in part to allow their militaries to work better together.

The US president, whose arrival in Sydney has spurred a virtual lockdown on the city, was scheduled to meet with Howard's national security committee before lunching with Australian troops on Sydney Harbour.

Bush is one of 20 world leaders in Australia for the APEC summit that will take place on Saturday and Sunday. - AFP/ch