President Bush flies into London today for the last time as US leader. In an exclusive and wide-ranging interview with Ned Temko on the eve of his visit, he defends his legacy, issues a stern warning to Iran ... and reveals his plans for a freedom institute devoted to 'universal values'

For a political leader who has rivalled Gordon Brown's vertiginous nosedive in the opinion polls in the past year, president George W Bush looked remarkably untroubled by self-doubt as he crossed Europe last week.

The focus back home has shifted to the battle between Barack Obama and John McCain to succeed him. But Bush, on his last European tour as American President, is determined to prosecute his foreign policy agenda for his final seven months in the White House. Dealing aggressively with Iran, and its continuing nuclear aspirations, is top of the list. Stabilising and rebuilding Iraq, staying the course in Afghanistan and building a 'unity' alliance with key European leaders to achieve these goals are the other themes of the farewell trip.

At street level, the president's visit to Slovenia, Germany, Italy, France and now Britain has sometimes had an almost surreal quality. It is not just the politicians and pundits who seem to have begun shifting their gaze to a post-Bush era. Despite a small scattering of demonstrations, with a further protest expected in London, there has been little of the fire and fury that greeted him at the height of the controversy over the Iraq invasion.

On the road to Fiumicino airport in Rome, where as in other capitals on his itinerary the police had far outnumbered any demonstrators, one taxi driver remarked: 'Bush has been very bad for my country.' But when asked what he had against the US President, it was not climate change policy, Iraq or Guantánamo Bay: 'It's the traffic!'

Bush's focus, as he made clear in a lengthy Observer interview before his arrival in London today for talks with Brown, has been on forging a broader relationship with Europe that moves on from the days of his close partnership with Tony Blair. A united front is deemed vital to deal with what he sees as the West's single most pressing policy challenge - heading off Tehran's nuclear ambitions. 'All options,' Bush has stated repeatedly, remain 'on the table' if diplomacy fails to get Iranian president Mahmoud Ahmadinejad to abandon Iran's uranium enrichment programme.

On his way to London, Bush was pressing broadly sympathetic leaders in Berlin, Rome and Paris on that issue, as well as on the need to beef up allied support for the battle against the resurgent Taliban in Afghanistan.

He may be on his way out next January, conceivably to be replaced by a Democratic candidate fiercely critical of his foreign-policy approach. But Rome's closed thoroughfares, the small army of secret-service agents and the motorcade waiting to speed Bush to a meeting with the Pope after the Observer interview offered a reminder that he still holds the most powerful political office in the world. Bush has no regrets about how he has used that power. Asked what he thinks his legacy might be, he says he is happy to await the verdict of history. But he cannot resist also offering his own, suggesting 'the liberation of 50 million people from the clutches of barbaric regimes is noteworthy, at a minimum'.

As the jacketless president expanded on his foreign policy strategy in the garden of the palatial 17th-century US ambassador's residence on a Rome hilltop, he was keen to shift the focus away from the prospect of American military action against Iran. His interest, he said, was in 'results' - in demonstrating sufficient Western steel, through toughened economic and financial sanctions, to resolve the Iran issue diplomatically.

The real 'options on the table' that should worry the world lay elsewhere - in the likelihood of moves by Iran's Arab neighbours to develop nuclear weapons of their own. He said the 'time is now' for the outside world to put in place 'diplomacy with consequences' to bring Iran's uranium-enrichment activities to an end, not least because he believed that a new group of European leaders had 'gone beyond the Iraq period' and were engaged with the US in multilateral efforts on a range of other issues.

In London, however, Iraq inevitably will be back on the agenda. Today will begin for the President and the First Lady, Laura Bush, when they meet the Queen and Prince Philip at Windsor Castle, and will end with dinner with the Browns. But tomorrow - after breakfast with an international Middle East envoy named Tony Blair - he will have formal Downing Street talks with Brown and discuss a 'timetable' for British troop withdrawals from Iraq.

Asked in the Rome interview about popular opposition in Britain to the war and his presidency, he replied: 'Do I care? Only to the extent that it affects people's view of the citizens I represent. Do I care about my personal standing? Not really.'

He remained, he said, convinced that Iraq, and the world, was a better place without Saddam Hussein. And he said that while 'Presidents don't get to do re-dos' on issues such as Saddam's lack of weapons of mass destruction, there was one lesson from the run-up to the Iraq war that he felt was hugely relevant to the standoff in Iran.

'We didn't realise, nor did anyone else,' Bush said, 'that Saddam Hussein felt like he needed to play like he had weapons of mass destruction. It may have been, however, that in his mind all this was just a bluff ... that the world wasn't serious.'