President Bush vowed last night that Iraqi President Saddam Hussein's invasion of Kuwait "will fail" and used the Persian Gulf crisis to call on Congress to approve a budget agreement, tailored to his specifications, that he said would help America "remain strong and vital."

Pointedly noting that one-time adversaries like the Soviet Union and the tens of thousands of American military personnel serving in the gulf have been able to "work in common cause," Bush called on the warring factions in Washington's budget struggle to "come together to fulfill our responsibilities here."

"We will not let this aggression stand," Bush said of Iraq's invasion of Kuwait. Outlining the international efforts of "a new partnership of nations" against Saddam, he declared, "It is Iraq against the world."

The president's prime-time report to the American people on the gulf situation, delivered to a joint session of Congress, offered little new detail but instead amounted to a comprehensive compilation of what he and others in the administration had stated in a variety of forums.

It left unanswered some of the major questions in the confrontation with Iraq: how long the administration expects the massive U.S. military deployment in Saudi Arabia and surrounding waters to remain in place; how much it will cost American taxpayers; how long the embargo against Iraq might take to work, and how likely military hostilities may be.

The president, in his third address to Congress in 20 months, got a warm reception and strong bipartisan support for his gulf policy, but some Democrats were critical of his budget pitch. Ambassadors from nations around the world, including Iraq and Kuwait, looked on as Bush labeled Saddam an international outlaw and vowed to force his withdrawal from Kuwait.

Bush made clear that his commitment in the gulf is long-term, noting, "Let no one doubt our staying power. We will stand by our friends." He also reiterated the four goals of the U.S.-led international effort set in motion by Iraq's Aug. 2 invasion of Kuwait -- the unconditional withdrawal by Iraqi forces from Kuwait, the restoration of Kuwait's government, assurance of the security and stability of the Persian Gulf region and the protection of U.S. citizens in Kuwait and Iraq.

To these four original goals, Bush added what he called a fifth, over-arching goal that has emerged the past weeks: using American leadership to help establish a new "world order" to replace the East-West competition of the Cold War era.

"Out of these troubled times, a new world order can emerge," he said, "a new era freer from the threat of terror, stronger in the pursuit of justice and more secure in the quest of peace." Saddam's invasion of Kuwait, he said, "is the first assault on the new world that we seek, the first test of our mettle."

The president offered words of support for Americans being held hostage in Iran and Kuwait, but said, "Our policy cannot change. And it will not change. America and the world will not be blackmailed." He quoted British Prime Minister Margaret Thatcher in saying that the West "will not stoop" to using human beings as bargaining chips.

But, Bush said as he moved to the domestic agenda in the final third of his speech, for the United States to assume this leadership role in the world, it must remain economically strong. "Our world leadership and domestic strength are mutual and reinforcing, a woven piece, as strongly bound as Old Glory." To "revitalize" the nation's leadership, Bush said, the budget deficit must be addressed "not after Election Day, or next year, but now."

In offering his prescription for problems that the president said Americans "are sick and tired" of hearing politicians fight over, he called for "growth-oriented tax measures," the same tax cuts he and President Ronald Reagan have championed. These include reductions in the capital gains tax rate, and new tax breaks for research and new home purchases, for creating urban enterprise zones and for encouraging more energy production.

He ruled out income tax increases to reduce the deficit, and insisted that defense cuts, while acceptable, had to fall within a "vital margin of safety."

The world, the president said, "is still dangerous . . . surely that is now clear . . . . This is no time to risk America's capacity to protect her vital interests."

The president also called for measures he has proposed previously to increase domestic energy production, including incentives for oil and gas exploration and quicker development of Alaskan oil and gas. He lamented the increasing American reliance on imported oil but made no broad pitch for conservation.

With or without a budget agreement, Bush called for a vote from Congress "no later than Sept. 28" on a "complete $500 billion deficit reduction package." Democrats do not disagree with the size of the package needed; the disagreement has been over the mix of tax increases and spending cuts.

On the budget deficit, Bush spoke as if the recent progress made in negotiations between congressional leaders and his budget director, Richard G. Darman, had not occurred.

For instance, he warned against "higher income tax rates" even though the most recent Democratic proposal made yesterday afternoon omitted earlier calls for higher marginal income tax rates on the wealthiest Americans.

Moreover, many of the "growth-oriented tax measures" Bush called for -- including breaks for research and development, creating enterprise zones and encouraging domestic oil drilling -- would add to the deficit rather than reduce it.

Before Bush spoke, congressional GOP budget analysts who have been taking part in the budget talks at Andrews Air Force Base said they hoped the president would mention the deficit only in passing, and would encourage the negotiators to continue working.

Instead, Bush chastised Congress for "phony deficit reduction, or promise-now, save-later-plans." If the Soviet Union could join with the United States in the Middle East, Bush said, "then surely we who are so fortunate to be in this great chamber -- Democrats, Republicans, liberals, conservatives -- can come together to fulfill our responsibilities here."

On the gulf, Bush outlined America's challenge at this "unique and extraordinary moment" as one of setting rules for the new order beginning to emerge. A new world free from the conflict and tensions of the Cold War is struggling to be born, he said, and the way in which the nations of the world meet Saddam's challenge will determine the shape of that world.

Had the United States not responded to the invasion with "clarity of purpose, if we do not continue to demonstrate our determination, it would be a signal to actual and potential despots around the world," Bush said.

The president touched on the foundation of the administration's case against Saddam -- that the United States and the other nations that depend on gulf oil cannot allow the Iraqi president to control a quarter of that oil. "We cannot permit a resource so vital to be dominated by one so ruthless," he said, "and we won't."

In response to complaints that Europeans, the Japanese and others who are even more dependent on gulf oil are doing too little, Bush offered thanks to the nations that are contributing forces and money and portrayed the effort as broadly international.

Noting the Soviet cooperation in isolating and condemning its former ally and major arms client, Iraq, the president said he and Mikhail Gorbachev agreed in their Helsinki summit Sunday that "no peaceful international order is possible if larger states can devour their smaller neighbors."

That agreement, he said, means that "no longer can a dictator count on East-West confrontation to stymie" international action against aggression."

Bush said the embargo against Iraq is starting to work and that Iraq "is feeling the heat." But he added, "I cannot predict just how long it will take to convince Iraq to withdraw" from Kuwait. The sanctions, he said, "will take time."

The president made no mention of direct military action, but he warned that his administration will "continue to review all options" with allies and to pledge that the invasion will not be allowed to stand. "Iraq will not be permitted to annex Kuwait," he said, "And that's not a threat. It's not a boast. That's just the way it's going to be."

Staff writer John E. Yang contributed to this report.