What the American people expect is a determined, relentless effort - that's exactly how we're going to behave

President Bush

In a White House speech, Mr Bush told city mayors and county leaders that he was proposing a budget of $37.7bn for "homeland security" during the next fiscal year.

He said it would provide substantial increases for police, firefighters and emergency medical teams - as well as improving intelligence gathering, securing US borders, combating bio-terrorism and stockpiling medicines.

The move comes a day after the president announced the biggest increase in 20 years in defence spending.

Bush: "We're still under attack"

Mr Bush said the money represented the start of a focus on domestic defence that would last throughout his presidency.

"We're still under attack," he said. "They still want to come after us. These are evil people, that are relentless in their desire to hurt those who love freedom.

"And since we're the bastion of freedom, the beacon of freedom, we're their target."

Weapons of mass destruction

The Federal Emergency Management Agency will be in charge of co-ordinating efforts with local governments.

"Even the best prepared states and localities lack adequate resources to respond to the full range of terrorist threats this country faces," said Mr Bush.

"Many areas have little or no capability to respond to terrorist attacks using weapons of mass destruction."

Before Thursday's announcement, Mr Bush had already appointed a Homeland Security Director, Tom Ridge, to enhance the government's ability to avert terror attacks on US soil.

Congress awaits budget

The increase in domestic security and defence funding comes as Mr Bush's proposed budget projects a deficit of $106bn, following four years of federal surpluses.

Such a move leaves him vulnerable to accusations that he is mishandling the economy.

"Part of the president's priorities are to protect the country by providing the defense of the United States, to protect the homeland," White House spokesman Ari Fleischer said.

"The president believes that the single most thing that our country or our government can do to help the economy grow is to prevent another terrorist attack."

Mr Bush will send his proposed federal budget to Congress for consideration in early February.