Public anxiety over mounting casualties in Iraq and doubts about long-term consequences of the war continue to rise and have helped to erase President Bush's once-formidable advantage over Sen. John F. Kerry concerning who is best able to deal with terrorist threats, according to a new Washington Post-ABC News poll.

Exactly half the country now approves of the way Bush is managing the U.S. war on terrorism, down 13 percentage points since April, according to the poll. Barely two months ago, Bush comfortably led Kerry, the presumptive Democratic nominee, by 21 points when voters were asked which man they trusted to deal with the terrorist threat. Today the country is evenly divided, with 48 percent preferring Kerry and 47 percent favoring Bush.

With fewer than 10 days before the United States turns over governing power to Iraq, the survey shows that Americans are coming to a mixed judgment about the costs and benefits of the war. Campaign advisers to both Bush and Kerry believe voters' conclusions about Bush and Iraq will play a decisive role in determining the outcome of the November election.

The shift is potentially significant because Bush has consistently received higher marks on fighting terrorism than on Iraq, and if the decline signals a permanent loss of confidence in his handling of the fight against terrorism, that could undermine a central part of his reelection campaign message.

Overall the poll had mixed news for both candidates. Bush's marks for handling the economy and Iraq both rose slightly over the past month, but his overall approval rating remains below 50 percent. Kerry leads Bush in a three-way test that includes independent Ralph Nader and is seen as more honest and trustworthy than the president, but those surveyed question whether he has a plan for Iraq.

Fewer than half of those surveyed -- 47 percent -- say the war in Iraq was worth fighting, while 52 percent say it was not, the highest level of disapproval recorded in Post-ABC News polls. Seven in 10 Americans now say there has been an "unacceptable" level of casualties in Iraq, up 6 points from April and also a new high in Post-ABC News polling. A majority say the United States should keep its forces in Iraq until the country is stabilized, but the proportion who want to withdraw now to avoid further casualties -- 42 percent -- has inched up again to a new high. Two in three Americans say the war has improved the lives of the Iraqi people, and a growing number of Americans say the United States is making significant progress toward a democratic government. Last month, 37 percent said they saw significant progress, while 50 percent say so now.

The public is sharply divided over whether the war contributed to the long-term security of the United States, with 51 percent saying it has, a new low in Post-ABC polls. Three in four say the conflict has damaged the image of the United States throughout the world, and a majority believe the war has not improved prospects for long-term peace and stability in the Middle East.

Virtually all of the recent movement against the war has occurred among political independents. Among those with no firm party ties, the proportion who said the war was "not worth fighting" increased from 48 percent in May to 59 percent in the latest poll.

Bush's approval rating on his handling of Iraq remains negative but rose slightly in the past month to 44 percent, with 55 percent saying they disapprove.

On the key domestic issue of the economy, 46 percent give Bush positive marks, up 7 points since March and his best showing since January. The survey also found that nearly half the country rates the health of the economy as "excellent" or "good," up 6 points from March and the highest since July 2001, following a succession of positive economic statistics.

But improved marks on Iraq and the economy did not translate into a rise in Bush's overall approval rating, nor did they improve his standing against Kerry in a hypothetical November matchup.

Bush's overall job approval rating held steady at 47 percent, at its lowest point in Post-ABC News polls, while his disapproval rating reached a new high of 51 percent. That leaves Bush in a shaky position politically, based on the rankings of other recent presidents seeking reelection.

In a November ballot test, Kerry leads Bush 48 percent to 44 percent among registered voters, with 6 percent supporting Nader. Last month, Kerry and Bush were tied. With Nader out of the race, Kerry's advantage swells to 8 points, evidence of the continuing threat that Nader's candidacy poses to the Democrat.

Interest in the campaign remains high while the proportion of persuadable voters is low. Voters are paying attention to this race earlier than they did four years ago when Bush ran against Al Gore.

Eight in 10 registered voters said they are following the campaign -- slightly higher than the proportion that was paying similar attention to the 2000 campaign three weeks before the election. One in 10 voters said there was a "good chance" they could change their minds between now and November.

The survey found that Kerry's advantages over Bush extended to a range of issues. When asked which they trusted to do the better job, Kerry held a double-digit advantage over Bush as the candidate the public preferred to deal with health care (21 points), taxes (13 points), prescription drug benefits for the elderly (12 points) and education (10 points), and smaller leads on handling international affairs (8 points), the economy (5 points) and the federal budget deficit (4 points).

In only one area -- Iraq -- was Bush more trusted, 50 percent to 45 percent.

The president is viewed as a stronger leader than Kerry and as the candidate who can be most trusted in a crisis. He is also seen as best able to "make the country safer and more secure" and the one who "takes a position and sticks with it."

But by 52 percent to 39 percent, Kerry is seen as more honest and trustworthy -- a troubling finding for Bush, whose truthfulness before the war in Iraq has been called into question.

The survey also found that eight in 10 Americans support the transfer of power from the U.S.-led coalition to an interim Iraqi government on June 30. Nearly half -- 48 percent -- said it should be Iraqis who have the final say over the presence of U.S. troops in Iraq, while just as many say it should be the Americans. Big majorities said the new Iraqi government and not the United States also should control Iraq's oil industry and handle the distribution of aid from other nations.

A total of 1,201 randomly selected adults, including 1,015 self-described registered voters, were interviewed June 17 to 20 for this telephone survey. The margin of sampling error for the overall results is plus or minus 3 percentage points.

Assistant polling director Claudia Deane contributed to this report.