President Bush yesterday expressed "deep and growing concern" over Iraq's "systematic dismantling" of Kuwait and its treatment of Americans and other foreign nationals there and warned Iraqi President Saddam Hussein that any Iraqi-supported acts of terrorism would be dealt with severely.

Departing for a weekend at Camp David, Bush said his statements on terrorism and Iraqi actions in Kuwait were not intended as "a signal that I'm shifting more towards the military."

But when he made similar remarks at a private meeting with congressional leaders yesterday morning at the White House, they were interpreted by some of those who attended as a clear warning that the country should be prepared for military action.

Bush's statements "leaned a little more toward {military action} than I've seen in the past," said one person who was there, adding that Bush indicated the country "has to be prepared for it."

The president also pressed Congress for quick action on his requests for additional funds to support Operation Desert Shield, debt forgiveness for Egypt and a massive weapons package for Saudi Arabia as the administration sought to prevent what one official described as "fraying around the edges" in congressional support for Bush's Persian Gulf policy.

Bush told the congressional leaders that forgiveness of $7 billion in Egyptian debts was "critical" to his gulf policy. But Rep. David R. Obey (D-Wis.), who chairs the House Appropriations subcommittee on foreign operations, reportedly told the president there is little support for the proposal on his panel.

The subcommittee is scheduled to take up the issue next week. Among the alternatives under consideration is one that would defer repayment of principal and stop the accrual of interest on the debt, sources said.

Congressional leaders continued to express overall support for the president's policy, but Senate Majority Leader George J. Mitchell (D-Maine) said, "Support for past actions does not suggest support for all proposals as to future actions."

Bush said he was "very much concerned" about a meeting of pro-Iraqi Arabs Monday in Amman, Jordan, in which participants called for suicide car bombs against the United States.

A senior State Department official said that the administration was outraged by Jordan King Hussein's decision to allow the conference and "this is another signal to the king that our concerns about terrorists are real and to allow that sort of thing is something the United States does not look on favorably."

Bush refused to criticize King Hussein, saying he blamed Saddam.

A senior administration official said there was "some concern" in the administration that Saddam will use terrorist attacks this fall to erode U.S. support for the Persian Gulf policy in the midst of the midterm election campaign. The official noted that while there was widespread speculation in the United States that the administration would launch an "October surprise" in the form of a military strike against Saddam in October, "we've got worries about an October surprise from him by having these {terrorist} groups unleashed."

Deputy White House press secretary Roman Popadiuk said the administration was disturbed by "the many terrorist groups and radical elements which are either based in Baghdad or that receive support from Saddam Hussein's government." He cited the Abu Nidal organization, the May 15th organization and the Palestine Liberation Front headed by Abu Abbas.

Bush also said the stories told by Americans and others who have fled Kuwait "evoke enormous outrage" about conditions there. He said the dismantling of Kuwait by the Iraqis "does violence to the rights of every single Kuwaiti" while showing Saddam's desire to "incorporate Kuwait into kind of a piece of terrority of Iraq."

The House Appropriations Committee is scheduled to take up the Egyptian loan forgiveness package Tuesday as it considers a $1.9 billion emergency levy to cover the costs of Desert Shield in August and September.

The action is politically unpalatable to members facing an election in which a major issue is the budget deficit. Members also are leery of setting a precedent that could invite other countries to seek similar treatment.

Staff writer Ann Devroy contributed to this report.