(Updates with Senate passage of Iraq funding bill, paragraphs 1-4)

By Steve Holland and Richard Cowan

WASHINGTON, May 24 (Reuters) - President George W. Bush on Thursday predicted a bloody summer in Iraq for U.S. troops and Iraqi civilians as insurgents step up attacks, while a divided U.S. Congress approved funds for the unpopular war.

Bush is expected to promptly sign a $100 billion bill passed on Thursday night by Congress to pay for the wars in Iraq and Afghanistan. The measure, unlike a bill vetoed by Bush earlier this month, contained no withdrawal deadlines for U.S. troops.

The legislation's passage capped a four-month struggle between the Republican president and the Democrats who control Congress. They pledged to resurrect attempts to force him to begin withdrawing troops from Iraq.

Despite the deployment of tens of thousands of U.S. and Iraqi troops in a major U.S.-led security crackdown, attacks have continued unabated.

On Thursday, a suicide car bomber killed 27 mourners at a funeral in Falluja, west of Baghdad. In Baghdad, gunmen shot to death all 11 passengers in a minibus in the mainly Shi'ite Husseiniya district.

Bush said he expected "heavy fighting in the weeks and months" ahead. "What they're going to try to do is kill as many innocent people as they can to try to influence the debate here at home," he said.

Asked at a Rose Garden news conference how long he believed he could sustain his strategy without significant progress, Bush noted the U.S. commander in Iraq, Gen. David Petraeus, was to report back on the effects of the new strategy at the end of the summer.

Defense Secretary Robert Gates said later he also anticipated more violence this summer from what he called "a smart, agile, thinking enemy."

"They know what's going on in this country and I think we should be prepared for them to make a very strong effort to increase the level of violence in July and August. My hope is that anticipating it will allow us to thwart it."

The predictions of more bloodshed came at a time when Americans' assessment of the war has never been worse, according to a CBS News/New York Times poll that said 76 percent of Americans believed the war was going somewhat or very badly for the United States.

Only 20 percent said the recent troop increase was making a positive difference, and just 23 percent approved Bush's handling of the war. His overall job approval was 30 percent.

PAYING FOR THE WAR, MORE CASUALTIES

Both chambers of Congress passed the funding bill on Thursday night. House Republican leader John Boehner of Ohio, his voice cracking with emotion, praised the bill with no withdrawal deadlines.

"When are we going to stand up and take them on? When are we going to defeat them? If we don't do it now, if we don't have the courage to defeat this enemy, we will long long regret it," he said.

Democrats voted against the war-funding portion of the bill in droves because it did not contain timetables for troop withdrawal. But the bill does for the first time tie Bush's certification on progress in Iraq to U.S. reconstruction aid for the country.

Three Democratic senators running for president -- Hillary Rodham Clinton of New York, Barack Obama of Illinois and Christopher Dodd of Connecticut -- opposed providing money with no withdrawal deadlines. Joseph Biden of Delaware voted yes.

The total cost of the war since 2001 exceeds half a trillion dollars.

There was no immediate claim of responsibility for the attack in Falluja, 30 miles (50 km) west of Baghdad in restive Anbar province. A doctor at a local hospital, Ahmed al-Ani, said 27 were killed and more than 30 wounded. Another hospital source put the death toll at 30.

Police said the suicide car bomber drove into a crowd of mourners as they walked down a Falluja street holding aloft the coffin of Allawi al-Isawi, a local businessman opposed to Sunni Islamist al Qaeda.

Thousands of U.S. troop reinforcements have been sent to Anbar as part of a stepped-up military initiative seen as a late effort to avert all-out civil war.

Tens of thousands of U.S. and Iraqi troops have been deployed in a major security crackdown focused on Baghdad, the epicenter of sectarian violence between majority Shi'ites and minority Sunnis.

The U.S. military confirmed a body pulled from the Euphrates River south of Baghdad on Wednesday was one of three U.S. soldiers missing since their patrol was ambushed on May 12. (Additional reporting by Richard Cowan in Washington)

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