The CIA has declined to comment on claims of a covert prison network

"We do not torture," Mr Bush told reporters during a visit to Panama.

He said enemies were plotting to hurt the US and his government would pursue them, but would do so "under the law".

Meanwhile, the US Supreme Court has allowed a legal challenge to the Bush administration's use of military tribunals for foreign detainees.

The court will decide whether a former driver for Osama Bin Laden, Salim Ahmed Hamdan, can be tried for war crimes before military officers in Guantanamo Bay.

Correspondents say the case will be a major test of the US government's wartime powers.

'Country at war'

The White House has not confirmed Washington Post claims that the CIA set up a covert prison network in eastern Europe and Asia to hold high-profile terror suspects following the 11 September 2001 attacks.

About 30 detainees, considered major terrorism suspects, were held at these "black sites", although the centres have now been closed, the paper reported.

On Sunday, the United Nations' special rapporteur on torture urged European officials to conduct high-level investigations into the allegations.

"We are finding terrorists and bringing them to justice," Mr Bush said at a joint news conference with Panamanian President Martin Torrijos.

"Our country is at war and our government has the obligation to protect the American people," Mr Bush said.

"Any activity we conduct is within the law."

The Senate has passed legislation banning torture, but the Bush administration is seeking an exemption for the CIA spy agency.

"We do not torture and therefore we're working with Congress to make sure that as we go forward, we make it more possible to do our job," Mr Bush said.

Bin Laden driver

The Supreme Court has agreed to review an appeals court ruling that Mr Hamdan could be tried by a military tribunal.

The court will hear arguments in the case in March or April, with a decision expected by June.

Mr Hamdan, from Yemen, is accused of conspiracy to commit war crimes, including terrorism.

A judge halted his trial last year, saying it could not proceed until a decision had been made on whether he was a prisoner of war under the Geneva Conventions.

Mr Hamdan contested his status as "enemy combatant", and his lawyers were seeking to force US authorities to try him in a civilian court, arguing that the military tribunals were illegal under US law.

Mr Hamdan worked for Bin Laden in Afghanistan from 1997 until the US attack in Afghanistan in 2001. He denies being a member of al-Qaeda.