US forces in Iraq have been drawn deeper into heavy fighting between Iraqi government troops and Shia militias.
As US helicopters launched air strikes in the southern city of Basra for the first time, President Bush described the Iraqi crackdown on the militias as a defining moment in the country's history.
Earlier, Iraqi Prime Minister Nuri al-Maliki has offered Basra residents a cash for weapons deal in an attempt to cut the arms flow to Shia militia.
The Prime Minister is seeking to end violent clashes across Iraq that have cost more than 150 lives.
US-led coalition aircraft bombed Shia militia positions in Basra, directly entering the fray for the first time since the Iraqi army launched the crackdown in the southern city.
Two bombing missions were carried out overnight against specific targets.
Mr Maliki gave Basra residents until 8 April to surrender heavy and medium weapons used against Iraqi army forces.
The prime minister's move is part of a three-pronged effort to break Shia resistance, along with the imposition of a three-day curfew in Baghdad and precision bombing by the US-led coalition.
Vice president's office hit
Mortar rounds struck the office of Iraq's Vice President Tareq al-Hashemi in Baghdad's heavily fortified Green Zone today, wounding two of his guards.
Five rounds struck the office of Mr Hashemi, but the politician was unhurt.
Militants have regularly bombarded the Green Zone in recent days, killing two Americans and wounding four others.
US President George W Bush has praised Iraqi Prime Minister Nuri al-Maliki for his determination to take on Shia militias in the country.
He was speaking after the Iraqi authorities imposed a three-day curfew in Baghdad.
As fighting has intensified, the US has ordered all personnel at its embassy not to leave re-inforced structures in the Green Zone.
President Bush said the Iraqi government's ability to take a tough stance was a sign of progress.
