"They tell us we're making progress in Iraq and that there is no civil war. That is a lie. There is a civil war and it is costing American and Iraqi lives every single day and we must change course in Iraq," said Kerry, who lost to President George W. Bush in the 2004 election.

His remarks came at a fund-raising dinner for about 650 New Hampshire Democrats. The state holds the first presidential primary and Kerry's scathing criticism of Bush and senior Republicans underlined growing speculation he would take another shot at the White House.

Kerry and other top Democrats are crisscrossing the country to boost Democratic congressional candidates in tight races less than four weeks before the November 7 elections in which Democrats hope to regain control of Congress.

Speaking to Reuters after the speech, he said he would make a decision on a 2008 White House bid after November elections. "I want to help elect a Democratic congress," he said.

The Massachusetts senator said Republicans could no longer preach moral values after a Capitol Hill cybersex scandal involving lurid e-mails sent by former Republican lawmaker Mark Foley to teenage congressional assistants.

"Those from the party that preaches moral values that covered this up, have no right to preach moral values any more," said Kerry. "What we have in Washington is a house of lies and in November we need to clean house."

House Speaker Dennis Hastert, facing calls by Democrats and some Republicans to resign, said this week his staff should be fired "if there was a cover-up"' in the handling of complaints about Foley's behavior toward teenagers.

In recent speeches, Kerry has positioned himself to the left of New York Sen. Hillary Rodham Clinton, the widely considered Democratic front-runner in 2008, by calling for a near-withdrawal of U.S. troops from Iraq by year end.

He now says his 2002 vote to authorize the Iraq invasion was a mistake and has taken stands on hot-button policy issues, such as proposing in August that all Americans be required to have health insurance by 2012.

Although Kerry has visited New Hampshire nine times since the 2004 election -- more than any other putative Democratic White House candidate -- a poll by the University of New Hampshire Survey Center this week showed voters ranked him fourth among possible Democrat presidential candidates.

Thirty percent of Democrats in New Hampshire favored Clinton, 16 percent preferred 2004 vice presidential candidate John Edwards, 10 percent supported former Vice President Al Gore and just 9 percent supported Kerry, the poll said.

"Kerry has dropped off significantly in recent months," pollster Andrew Smith said in the survey.

Jennifer Duffy, a political analyst at the nonpartisan Cook Political Report, said: "There's not an enormous amount of enthusiasm out there for Kerry right now. The feeling is that he has had the opportunity and now it may be time to give somebody else a chance," she added.