President Bush did not know about a deal to hand over the operation of six American ports to a Dubai-owned company until it was all but sealed, the White House said today.

Mr Bush has spent the last few days vigorously defending the proposal, which has attracted the opposition of both Republican and Democrat leaders in Congress, who object to giving effective control of New York harbour and five other ports to an Arab company.

But the White House admitted today that the President, who has threatened to veto any move by Congress to block the deal, did not know about the transaction until the furore erupted over the weekend.

Politicians of every stripe have expressed concerns that terrorists could use Arab ownership of the port operations to attack America.

"He became aware of it over the last several days," Scott McClellan, the White House Press Secretary, said today of the £4 billion deal to sell the British-owned P&O to Dubai Ports World, a company owned by the United Arab Emirates (UAE) government.

Asked if Mr Bush did not know about it until it was a done deal, Mr McClellan replied: "That’s correct."

Mr McClellan insisted that the President had asked every member of his Cabinet involved in the deal whether they were happy that it would not undermine America's security: "Every one of the Cabinet secretaries expressed that they were comfortable with this transaction being approved," he said.

Mr Bush has bullishly dismissed security concerns surrounding the deal, saying that the UAE is an ally in his Administration's War on Terror and that Middle Eastern companies must be allowed to do business in the US.

"The transaction should go forward in my judgment," Mr Bush said yesterday. "If there were any chance that this transaction would jeopardise the security of the United States, it would not go forward."

Unless Congress prevents it, Dubai Ports World will take control of the ports on March 2. The ports affected by the deal are in New York, Miami, New Jersey, Baltimore, New Orleans and Philadelphia.

Mr Bush suggested that going back on the arrangement would be viewed dimly by US allies in the Middle East, given that the ports for years have been operated by another foreign company. "I think it sends a terrible signal to friends around the world," the President said.

The White House is expected to launch a campaign later today to reassure the public that the sale is safe. Senior officials are expected to explain at a press conference what convinced them to approve the deal, the first-ever sale involving US port operations to a foreign, state-owned company.

But Robert Menendez, the Democratic Senator for New Jersey, said that he believed the Senate would be able to muster the 67 votes needed to override a Bush veto.

The deal has been opposed by a bloc of Democratic and Republican Congressmen, including Bill Frist, the leader of the Republicans in the Senate. Many have criticised what they describe as the UAE’s "spotty" record on combating terror.

One of the September 11 hijackers drew money from bank accounts from the UAE to fund the attack, while another, Marwan al-Shehhi, was a UAE citizen.

"The decision to finalise this deal should be put on hold until the administration conducts a more extensive review," Mr Frist said in a statement, adding that the contract raised "serious questions regarding the safety and security of our homeland.

Pete King, the Republican chairman of the House Homeland Security Committee, and Senator Charles Schumer, a Democrat from New York, have threatened to introduce emergency legislation to suspend the ports deal.

''I will fight harder than ever for this legislation, and if it is vetoed I will fight as hard as I can to override it,'' said Mr King.

Dennis Hastert, the Republican Speaker in the House of Representatives, has written to the White House calling for an "immediate moratorium" delaying the contract.

Arab-American groups say that the controversy smacks of racism. The American-Arab Anti-Discrimination Committee issued a statement charging "rhetoric and bias" during the debate.

"Those who purport that ports can be run securely by a British company, but not by an Arab one, are engaging in racial profiling on the corporate level," the group said.

The US business community also has joined the debate. Continental Stevedoring and Terminals Inc - a Miami-based affiliate of P&O - complained in a court filing that the takeover would force it to become an "involuntary partner" with Dubai’s Government and "may endanger the national security of the United States".

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