The US Senate has dealt a fatal blow to President George Bush's overhaul of immigration policy, an emotional issue that has divided Americans in the run-up to next year's presidential election. Dashing the hopes of millions of immigrants seeking legal status and exposing a deep lack of support among Mr Bush's own Republicans, the bill fell 14 votes short of the 60 needed in the 100-member Senate to advance towards a final vote.

Mr Bush conceded defeat yesterday and said he was moving on to other issues such as balancing the federal budget, when it became clear the immigration legislation would not be revived in the final 18 months of his two-term presidency.

"A lot of us worked hard to see if we couldn't find common ground. It didn't work," said Mr Bush, whose approval ratings have fallen to about 30 per cent amid anger over the Iraq war and a negative public mood.

The bill tied tough border security and workplace enforcement measures to a plan to legalise an estimated 12 million illegal immigrants, most from Latin America, and to create a temporary worker program sought by business groups. It also would have created a merit-based system for future immigrants.