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NATO leaders prepared Thursday to invite seven new countries to join the world's biggest military alliance in a historic move extending its sphere deep into the heart of formerly communist eastern Europe.

A two-day summit in Prague is expected to extend invitations to Bulgaria, Estonia, Latvia, Lithuania, Slovakia, Slovenia and Romania with a view to joining at its next summit in 2004.

But a shadow was hanging over the gathering in the form of Iraq, which US President George W. Bush warned faced the "severest of consequences" if it fails to comply with a UN deadline of December 8 to declare its weapons of mass destruction.

The North Atlantic Treaty Organization also has the task of grappling with its own relevancy in the post-September 11 age, when the spectre of terrorism replaced fears of another European war.

NATO aims to transform itself, slimming its command structure, thrashing out what each of its soon-to-be 26 members can contribute to military capability, and approving a 21,000-strong rapid reaction force.

The summit of more than 40 heads of state and government will take place under unprecedented security, with US fighter jets helping patrol the skies above the Czech capital and some 16,500 police and soldiers on the streets.

In a keynote speech Wednesday, Bush said NATO's expansion should continue beyond the Prague summit.

"Every European democracy that seeks NATO membership and is ready to share in NATO's responsibilities should be welcome in our alliance," he added.

Czech President Vaclav Havel, too, urged the alliance to offer the prospect of membership to more Balkan nations, including Serbia -- against which it went to war in 1999 during the regime of former president Slobodan Milosevic.

Although the names of the seven countries to be invited to join are widely known, the formal announcement was expected in the morning.

Afterwards, the agenda turns to Iraq, with Bush calling on his NATO partners to help strip Iraqi leader Saddam Hussein of any chemical, biological or nuclear weapons.

"Should he again deny that this arsenal exists," the president warned, "he will have entered his final stage with a lie."

He also appeared to rebuke European allies, such as Germany, which are wary of joining any military strike on Iraq.

"The world needs the nations of this continent to be active in the defense of freedom, not inward-looking or isolated by indifference," he jibed.

NATO chief George Robertson said the alliance would agree on a message of support for the US line on Iraq.

Apart from expansion, one of the landmark proposals also set to be endorsed in principle at the summit is the US suggestion of a rapid reaction force that would be capable of deploying to global hotspots within days.

Possibly the most important aspect would be its promised ability to deploy outside Europe, NATO's traditional sphere of operations, which it was created 53 years ago to defend against Soviet aggression.

European nations broadly support the idea of the rapid reaction force, as long as it does not double up with the European Union's own planned rapid response army.

While the reaction force is central to NATO's transformation, so too is the readiness of European members who have fallen far behind the United States on defence spending to promise to make up at least some of the gap.

The allies are likely to adopt a programme of military commitments focusing on areas ranging from strategic air transport and guided missiles to defence against chemical, biological or nuclear attack. 

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