The clock was ticking for Saddam Hussein Tuesday, 16 hours after President Bush ordered the Iraqi leader to step down in 48 hours or face war.

"All the decades of deceit and cruelty have now reached an end. Saddam Hussein and his sons must leave Iraq within 48 hours. Their refusal to do so will result in military conflict commenced at a time of our choosing," Bush said from an area of the White House called the Cross Hallway.

Aides said the president was reserving the Oval Office as the setting for a later address when the moment of conflict begins, as everyone now expects it will.

"For their own safety, all foreign nationals, including journalists and inspectors, should leave Iraq immediately," Bush said in an expected warning to bystanders.

On Tuesday, Iraq rejected Bush's ultimatum. This came after Saddam's son elder son, Odai Hussein, urged Bush to "give up power in America with his family."

But Defense officials told Fox they were already getting a number of anecdotal reports of handfuls of Iraqi troops trying to surrender in the North.

Senior Defense officials expect large numbers of defections in the first hours of a war.

Already, several countries have urged their nationals to leave the area and U.N. Secretary-General Kofi Annan ordered out of Iraq the 155 weapons inspectors and support staff there.

In his 15-minute speech, Bush said he regretted the U.N. Security Council's failure to agree on another resolution, but he said the war will be about liberation, and should not focus on the collapse of diplomacy.

"The security of the world requires disarming Saddam Hussein now," Bush said.

Speaking in the somber tone that he has affected of late, Bush said that he has every legal right afforded to him by Congress and U.N. Resolution 1441 to take action against Saddam. He cited two resolutions from 1991, still in effect, that said if Iraq fails to abide by demands to disarm, it will be subjected to renewed military action.

"America tried to work with the United Nations to address this threat because we wanted to resolve the issue peacefully. We believe in the mission of the United Nations," he said.

While not mentioning any nation by name, Bush also took a shot at some U.N. members, who still believe that Saddam would abandon weapons of mass destruction on his own.

"In the 20th century, some chose to appease murderous dictators whose threats were allowed to grow into genocide and global war. In this century, when evil men plot chemical, biological and nuclear terror, a policy of appeasement could bring destruction of a kind never before seen on this earth ... and responding to such enemies only after they have struck first is not self-defense. It is suicide."

Perhaps trying to appeal to the remaining third of the U.S. population that still opposes war, the president made one last effort to link Saddam to terrorists that would attack U.S. soil.

"The danger is clear: Using chemical, biological or, one day, nuclear weapons obtained with the help of Iraq, the terrorists could fulfill their stated ambitions and kill thousands or hundreds of thousands of innocent people in our country or any other. The United States and other nations did nothing to deserve or invite this threat, but we will do everything to defeat it," he said.

Bush added that once war begins, Saddam will attempt to cling to power and in desperation may try to conduct terrorist operations.

"These attacks are not inevitable. They are, however, possible. And this very fact underscores the reason we cannot live under the threat of blackmail. The terrorist threat to America and the world will be diminished the moment that Saddam Hussein is disarmed," he said.

Bush spoke after deciding to raise the nation's terrorism alert from yellow to orange, the second-highest category of risk.

The president also sent a message to the Iraqi people that the United States will lead the effort to rebuild the country once Saddam is vanquished. He promised that any action is not directed at the Iraqi people but at Saddam and the United States will quickly provide food and medicine.

"We will help you to be free ... The tyrant will soon be gone. The day of your liberation is near," Bush said.

The president told Iraqi military units that if they want a free country, they will be given instructions telling them how to lay down their arms and avoid injury.

"It is too late for Saddam Hussein to remain in power. It is not too late for the Iraqi military to act with honor and protect your country, by permitting the peaceful entry of coalition forces to eliminate weapons of mass destruction," Bush said. "If war comes, do not fight for a dying regime that is not worth your life."

Earlier in the day, White House spokesman Ari Fleischer declared that "the diplomatic window has now been closed." The comment came just 12 hours after Bush's return from an Atlantic island summit with his allies from Britain and Spain.

A quick round of telephone calls Sunday night and Monday morning confirmed what aides said Bush had concluded before the summit: The allies' U.N. resolution was doomed to fail.

He ordered the measure withdrawn to avoid an embarrassing defeat, then gave the go-ahead for a long-planned ultimatum address.

Aides said the commander-in-chief of 250,000 U.S. troops poised at the borders of Iraq debated with officials over making the offer to the Iraqi president, and chose to do so in case anyone challenges Bush that he didn't make every opportunity available to Saddam to prevent military conflict.

The president met with congressional leaders just two hours before, speaking to tell them about the ultimatum. None of the lawmakers emerging from the meeting said they thought Saddam would flee Iraq.

The American public, by a 2-1 margin, generally supports military action against Iraq to remove Saddam, a slight increase from recent weeks, according to a CNN-USA Today-Gallup poll out Monday. Opinion was evenly divided when people were asked about an attack without an attempt to gain U.N. backing.

White House and congressional sources said Bush intends to send Congress a bill seeking more than $70 billion to pay for the war.

Seven months ago, Secretary of State Colin Powell helped persuade Bush to seek U.N. approval for military action despite the objections of anti-Saddam hawks like Vice President Dick Cheney.

His diplomacy derailed, Powell sounded ready to turn to war. "The moment of truth is arriving," said the retired Army general who was chairman of the Joint Chiefs of Staff during the 1991 Persian Gulf War led by Bush's father.

Earlier in the day, Powell said the only way war could be avoided was for "Saddam Hussein and his immediate cohorts to leave the country."

He added that even an 11th-hour effort by Saddam to disarm wouldn't avoid war.

"I can think of nothing Saddam Hussein could do diplomatically," he said. "He had his chance."

The Associated Press contributed to this report.