Françoise Ducros, who has a reputation for acerbic off the record comments, was heard by two reporters on Wednesday to say “what a moron” after Mr Bush called on Nato countries to spend more on defence.

Jean Chrétien, the Prime Minister, sought immediately to repair damage with Washington, saying on television: “He is not a moron. He is my friend.” Mr Chrétien said that he had declined an offer by Ms Ducros to resign.

The remark was evidence of tension between the United States and Canada, which has offered less than wholehearted support for Washington’s campaign against Iraq.

The President may have been speaking in general terms about defence spending, but Mr Chrétien’s delegation saw his remarks as a veiled reference to Canada. John McCallum, the Defence Minister, had on the same day said that Canada would decide for itself how much to spend and rejected pressure by the US Ambassador in Ottawa to buy six US-made transport jets at £100 million each.

Ms Ducros’s remark was largely ignored in the United States. It was mentioned briefly in The New York Times, the Chicago Tribune, and was treated humorously on a CNN talk show.

Ari Fleischer, President Bush’s spokesman, said at the summit in Prague that the comment came from “somebody who obviously doesn’t speak for the Canadian Government”.

Ms Ducros does speak for the Canadian Government, however, although her briefings to reporters are usually off the record. Her remark reflects the view of Canadians who do not regard Mr Bush as the equal of Bill Clinton or Tony Blair.

Canadians like to laugh at Americans and poke fun at their President. A television show, Talking to Americans, is very popular. People chosen at random on the streets of American cities are asked questions about Canada and are shown to know next to nothing about the country.

The show interviewed Mr Bush in Michigan two years ago while he was campaigning for the presidency and got him to praise “Mr Putin” as the Prime Minister of Canada.

Government officials in Ottawa, who on Wednesday were distributing photographs of Mr Bush and Mr Chrétien smiling and talking together, were taken by surprise by Ms Ducros’s comment.

A member of Mr Chrétien’s entourage in Prague said of the Prime Minister’s apology on television for the remark: “It’s not what we call a ‘win-win’ situation in the best of times.”

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