Mourning the loss of the Republican grip on Washington, Bush has promised to co-operate with Democrats after they added control of the Senate to their stunning House victory in Tuesday's election.
Bush was due to sit down for lunch with Nancy Pelosi, the Democrat who will wield power in the new House of Representatives. Pelosi is reviled by many Republicans as an "extreme" liberal who has mocked the president as "incompetent."
Nonetheless, White House counsellor Dan Bartlett said Bush "accepts the results of the election and looks forward to working with new Democratic colleagues," adding that Americans had sent a "message" they want both sides to work together.
Bush made the first move and took away a likely target of Democratic congressional probes on Iraq by casting off Defence Secretary Donald Rumsfeld, a lightning rod for critics of the handling of the Iraq war, on Wednesday.
Democrats completed a double-pronged capture of Congress with a narrow Senate victory in the decisive state of Virginia, according to US television network projections, as Democrat Jim Webb ousted Republican Senator George Allen by just over 7,000 votes.
The win means Democrats will control powerful panels like the Senate Foreign Relations committee, have the power to compel testimony from officials, and be able to block confirmation of cabinet offices or any new Supreme Court nominees.
Though Democrats will press for action on issues unpopular with Bush, such as the minimum wage and health care, the dominant issue shaping US politics in the run-up to the 2008 presidential polls will be Iraq.
Pelosi, who will be accompanied at the White House lunch by current Minority Whip Steny Hoyer, is on record as favouring a phased withdrawal of US troops, and other members of the Democratic Party in Congress have backed solutions including an immediate exit or a partition of the strife-torn country.
Bush admitted on Wednesday the election was a reflection of voter anxiety over the "lack of progress" in Iraq but insists there is no alternative to victory, and as commander in chief, he has the power to dictate foreign and military policy.
Most eyes are now turning to a blue-chip bipartisan commission, known as the Iraq Study Group, led by former secretary of state James Baker, which is probing new approaches to the occupation and is likely to report within months.
The report could provide political cover for both parties to coalesce around a common strategy for Iraq, where violence is still raging and more than 2,800 US soldiers and tens of thousands of civilians have died.
"We have an opportunity with this bipartisan Iraq Study Group, members of both political parties coming together to work together to bring greater consensus to a critical issue to the security of our country," said Bartlett.
The approach of Bush's nominee to succeed Rumsfeld, Robert Gates, a former CIA chief seen as more moderate than his combative predecessor, will also be closely watched.
The Virginia victory, the final race out of 33 Senate seats up for grabs, handed Democrats control of both houses of Congress for the first time in 12 years.
Combined with two avowed independent senators likely to caucus with Democrats, the party ended up with a 51-49 margin over Bush's party.
Voters piled on anger over the course of the war in Iraq and a heap of corruption charges and scandals which have tainted the Republicans in the past two years, exit polls suggested.
They also expressed concern over skyrocketing health care costs, the economy, illegal immigration and "values" issues such as stem-cell research, gay marriage and abortion.
Republican congressional incumbents crashed to defeat in at least 16 states.
The Democrats also won six governors' seats to take the majority of the 50 statehouses for the first time in 12 years. Hollywood star Arnold Schwarzenegger, a Republican, bucked the trend and was re-elected in California, crushing Democratic rival Phil Angelides.

Copyright AFP (Agence France-Presse), 2006