Key Points:

The United States yesterday conceded that New Zealand's anti-nuclear policy is strongly supported by Kiwis - a tacit acknowledgment that America no longer seeks to change it.

The concession was made by President George W. Bush behind closed doors in his formal talks with Prime Minister Helen Clark.

It marks a turning point in the US-NZ relationship.

Helen Clark left Washington last night positive about the reception she received on a free trade agreement from both Mr Bush and the United States Trade Representative Susan Schwab.

After talks with the President, the PM raised the prospect of greater participation by the United Nations in Iraq, a hint that she may encourage such a move.

The acknowledgment on the nuclear issue will not alter the fact that the United States still has sanctions against New Zealand, principally banning joint military exercises.

But it represents a turning point in the relationship that soured after the Fourth Labour Government passed anti-nuclear legislation, effectively banning US warships and ending the 35-year Anzus military alliance.

The nuclear issue and the US sanctions will still matter, but not nearly as much as they have.

The United States has never had an overt policy of seeking repeal of the 20-year-old law but that has been the well-understood position.

Now Washington has decided to step around it and to seek new areas of co-operation.

Its new approach to New Zealand was confirmed when it became clear that National had adopted a bipartisan policy on the law, that New Zealand was becoming more valuable to the US, particularly in Asia and the Pacific, and that it needed to foster friends.

The acknowledgment by Mr Bush in the formal talks was not just a casual observation. Such statements are carefully planned in the detailed preparation for bilateral meetings when positions and plans are discussed.

Mr Bush himself did not mention the nuclear issue in his public appearance with Helen Clark in the Oval Office after their talks and avoided controversies such as Iraq and the prospect of the Congress extending his fast-track trade promotion authority when it runs out in June.

The PM said later it had been discussed "in the context of the US being well aware that this a well-supported policy within New Zealand".

She said he read the situation correctly and that it was not a barrier to good relations.

Mr Bush and Helen Clark made statements after their talks but he would not take questions.

It took a little of the shine off the visit but Helen Clark fell victim to domestic politics. Mr Bush almost certainly wanted to avoid talking about the conflict he is in with the Congress over the purge of US attorneys.

He praised Helen Clark personally as a "straightforward honest woman who cares deeply about the country she represents". He also praised her leadership on Pacific problems.

The PM's two-day Washington visit did not produce any great tangible result but it was not expected to.

She put New Zealand's case for a free trade agreement if the US gets to the point of adding any country to the list of those it's negotiating with.

Mr Bush echoed the views of politicians Helen Clark met on Capitol Hill when he said negotiating a deal with NZ would not present many problems.

Said Helen Clark: "I've come away thinking there'll be a time. I don't think it's a question of if - I think it's a question of when."

After her meeting with Susan Schwab, she believed New Zealand would get "a close look" if an opening came up in the remaining two years.

Helen Clark also met Defence Secretary Robert Gates at the Pentagon.