President Bush and John Kerry clashed again over Iraq in their second live televised debate, in an aggressive contest after which instant polls gave a slight victory to the Democratic challenger.

But in a more relaxed "town hall" format, which allowed both men to roam about a circular stage with a microphone to address floating voters in the audience, Mr Bush gave a stronger performance than his tense and stumbling effort in the first encounter.

Under attack from the Mr Kerry for making the world a dangerous place over his decisions in Iraq, the President told the audience in St Louis, Missouri, that September 11 had changed the way the US had to look at the world.

And he said that Osama bin Laden would one day be captured. "Of course we're going to find Osama bin Laden," he said.

In the week that weapons inspectors reported that they did not find any weapons of mass destruction in Iraq, Mr Bush accepted that his decision to oust Saddam may have been unpopular, but insisted it was the right decision.

"Taking Saddam Hussein out was unpopular but I made the decision because I thought it was in the right interests of our country," he said.

But Mr Kerry hit back saying: "The world is more dangerous today because the President did not make the right judgements."

The 90-minute televised encounter was vital for Mr Bush after a widely-perceived loss in the first debate. He came out fighting, at one point cutting off the mediator to demand an answer when Mr Kerry accused him of deciding to "go alone" in Iraq.

Mr Bush said that there was a coalition in Iraq including troops from Britain and Poland. "You tell Tony Blair we're going alone. Tell Tony Blair we're going alone. Tell Silvio Berlusconi we're going alone. Tell Aleksander Kwasniewski of Poland we're going alone."

The Massachusetts Senator accused Mr Bush of failing to formulate a plan to bring stability to Iraq. He said: "The military's job is to win the war. The President's job is to win the peace."

Mr Kerry said the dangers posed by Iran and North Korea had grown "while the President has been pre-occupied with Iraq where there was not a threat".

Mr Bush replied: "He said he thought Saddam Hussein was a growing threat. Now he is saying it was a mistake to remove Saddam Hussein from power. You have got to be consistent when you're the President, there's a lot of pressures."

The President addressed recent rumours that a second Bush Administration would re-instate the military draft. "Forget all the talk about the draft. We are not going to have a draft as long as I am president. Period," he said.

Mr Kerry said that the military was over-extended, claiming that there was already a "back door" draft, in the call-up and extension or tours of duty for the National Guard.

The debate shifted to domestic policy and Mr Bush tried to portray Mr Kerry as a 'tax-and-spend liberal'. He said Mr Kerry would need to raise taxes to pay for $2.2 trillion. "He is going to tax everybody here to fund his programmes. That's just the reality," he said. "Of course he is going to raise your taxes."

Mr Kerry replied: "I am not going to raise taxes," adding that he had costed his proposals.

The candidates were asked about the controversial issue of stem cell research. Mr Bush said some stem cells were already available for research which could one day, potentially lead to cures for diseases such as Parkinson's. But he was opposed to using any more cells from embryos because of the ethical implications.

Mr Kerry was in favour of further research, saying he was a friend of Christopher Reeve, the paralysed former Superman actor, who may one day be able to walk again thanks to such science.

An ABC News instant poll handed victory to Mr Kerry by a slight margin: 44 per cent to Mr Bush’s 41 per cent, with 13 per cent declaring a draw. A CNN/USA Today/Gallup poll put the figures at 47 per cent for Mr Kerry and 45 per cent for Mr Bush.

With less than four weeks to go before the November 2 election the two men are level-pegging in the polls. The latest survey by Time magazine found that Mr Kerry had the backing of 47 per cent of likely voters and Mr Bush had 45 per cent.

The latest Gallup Poll for CNN and USA Today showed the two men in a dead heat, with each polling at 49 per cent among likely voters. The third and final televised debate is in Arizona on Wednesday night.

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