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Saddam Hussein offered to step down and go into exile one month before the invasion of Iraq, it was claimed last night.

Fearing defeat, Saddam was prepared to go peacefully in return for £500million ($1billion).

The extraordinary offer was revealed yesterday in a transcript of talks in February 2003 between George Bush and the then Spanish Prime Minister Jose Maria Aznar at the President's Texas ranch.

The White House refused to comment on the report last night.

But, if verified, it is certain to raise questions in Washington and London over whether the costly four-year war could have been averted.

Only yesterday, the Bush administration asked Congress for another £100billion to finance the conflicts in Iraq and Afghanistan.

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Offering a grammar lesson guaranteed to make any English teacher cringe, President George W. Bush told a group of New York school kids: "Childrens do learn."

Bush made his latest grammatical slip-up at a made-for-TV event where he urged Congress to reauthorize the No Child Left Behind Act, the centrepiece of his education policy, as he touted a new national report card on improved test scores.

The event drew New York Mayor Michael Bloomberg, Education Secretary Margaret Spellings plus teachers and about 20 fourth and fifth graders from P.S. 76.

During his first presidential campaign, Bush -- who promised to be the "education president" -- once asked: "Is our children learning?"

On Wednesday, Bush seemed to answer his own question with the same kind of grammatical twist.

"As yesterday's positive report card shows, childrens do learn when standards are high and results are measured," he said.

The White House opted to clean up Bush's diction in the official transcript.

Bush is no stranger to verbal gaffes. He often acknowledges he was no more than an average student in school and jokes about his habit of mangling the English language.

Just a day earlier, the White House inadvertently showed how it tries to prevent Bush from making even more slips of the tongue than he already does.

As Bush addressed the U.N. General Assembly on Tuesday, a marked-up draft of his speech briefly popped up on the U.N. Web site, complete with a phonetic pronunciation guide to get him past troublesome names of countries and world leaders.

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