President George Bush paved the way for Paul Wolfowitz's resignation as president of the World Bank with valedictory praise yesterday, as Mr Wolfowitz and the board remained locked in tense negotiations over his exit terms.

Mr Bush told reporters: "I regret that it has come to this. I admire Paul Wolfowitz. I admire his heart and I particularly admire his focus on the poor.

"I know Paul has an interest in working for the bank and making sure it focuses on things that matter. I applaud his vision and respect him a lot. I regret this."

However, bank officials said Mr Wolfowitz's agreed departure should still not be taken for granted amid haggling over exit terms. Mr Wolfowitz wants acknowledgment of his service and that the bank shared responsibility for the controversy over a generous secondment package for Shaha Riza, his girlfriend.

A report on Monday into his role in the secondment found that he broke the bank's code of conduct, three staff rules and the terms of his contract.

His lawyer Robert Bennett insisted he would not leave "under a cloud" and would rather risk the prospect of a formal vote of the board to censure or dismiss him. Many board members, however, strongly resist the idea that they should accept part of the responsibility for Mr Wolfowitz's ethics violations.

A source close to the board said the most Mr Wolfowitz could hope for was that the board would not formally reprimand him. Some want to ratchet up the pressure on Mr Wolfowitz by formally endorsing the findings of the report, a possible prelude to a no-confidence vote.

Meanwhile, bank staff waited in a state of agitation, anxious for the crisis to end, but insistent that the board should not agree to a "whitewash" on the ethics violations in return for getting him out. - (Financial Times service)