The two leaders appeared relaxed as they chatted to reporters ahead of their private talks on the sidelines of the Group of Eight summit, stressing their ability to work together but acknowledging that differences remained.

"We must be frank, we went through a difficult period," Bush said, referring to the row over Iraq that badly damaged transatlantic ties, with Washington deeply resenting Paris for its refusal to back the invasion of Iraq.

"There is no question where Jacques Chirac stood and I made it clear where I stood. That's why I can say we've got good relations, because we are able to be very honest with each other," the US leader noted.

"But when the time came to focus on a free Iraq, a healthy Iraq, a prosperous Iraq, we're in agreement," Bush added, referring to Chirac, who was the most outspoken critic of the war to topple Saddam Hussein.

The two men, who had several brief exchanges on Sunday at the start of the G8 summit in Evian, had not met since last November at a NATO summit in Prague, and had only spoken twice by telephone since the US-French crisis erupted.

The acrimonious dispute sparked a torrent of vitriolic anti-French comments from US lawmakers and a wave of France-bashing in the United States.

The US president said critics in both countries were wondering whether the two could "actually sit down and have a comfortable conversation. And the answer is absolutely."

Bush added that the two had already discussed their "common desires to grow our economies", as G8 leaders were tackling the issue of how to kickstart world growth.

But neither has backed down from their positions on the Iraq war, with Chirac telling the Financial Times last week: "A war which lacks legitimacy does not acquire legitimacy just because it has been won."

The two managed to find common ground on UN Security Resolution 1483, adopted last month, which lifted sanctions on Iraq imposed in 1990 and set up a framework for the reconstruction of the battered country.

"We have a solid basis that is called resolution 1483," Chirac said when asked if France and the United States could work together on the issue.

Their talks on the sidelines of the G8 summit followed up their brief exchanges on Sunday, characterised by a brief handshake, stock smiles for the cameras and Bush's gift to Chirac of three books on Native American culture.

Both have taken pains to emphasise the importance of focusing on the future, especially on Iraq, but their contrasting worldviews hint that it could take time to mend their strained relationship.