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It will be his second meeting with the pontiff this year but will not take place in the papal library, where world leaders are usually received.
Our correspondent says a walk around the Vatican garden is unprecedented and like rolling out the red carpet.
It comes a day after Mr Bush was greeted by protests as he met Italian PM Silvio Berlusconi in Rome.
Vatican support
The Vatican says the Pope wanted to show his appreciation for the hospitality he was shown on a recent visit to the US.
But the BBC's Christian Fraser in Rome says there is more to it than that.
Notwithstanding their differences on Iraq and the Middle East, this is an evangelical president who has always defended the Christian message, he says.
Mr Bush's conservative line on abortion and stem cell research are strongly supported by the Vatican, points out our correspondent.
And the Holy See has welcomed the Bush administration's support for Africa.
Analysts say that for Republicans watching in the United States this relationship with the Vatican is important.
Blue collar Catholic voters will be a key group in the swing states come November's US presidential election.
Iran's disputed nuclear programme is expected to stay on the agenda during Mr Bush's European tour and analysts say the pontiff could play a role.
Unlike the Americans the Vatican has open diplomatic relations with Tehran, which has one of the biggest embassies to the Holy See.
The pontiff's message last year to the Supreme Leader, Ayatollah Ali Khamenei, was credited with helping secure the release of a group of British sailors seized in the Persian Gulf.
After Rome, Mr Bush, who leaves the White House in January, is scheduled to fly to Paris, where he will meet French President Nicolas Sarkozy.
(BBC)
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