By Caren Bohan

WASHINGTON, Oct 16 (Reuters) - U.S. President George W. Bush, trying to overcome the fallout from a scandal over veterans' health care, on Tuesday unveiled legislation aimed at bolstering care for soldiers wounded or traumatized in war.

Bush said that despite medical advances that have vastly improved battlefield medicine, the system for helping veterans recover once they get home needs to be overhauled.

"It's an old system, it's an antiquated system, it's an outdated system that needs to be changed," he told an audience in the White House Rose Garden that included disabled veterans and their families.

A scandal that erupted eight months ago over reports of shoddy health care for veterans added to Bush's domestic political woes and further fueled criticisms of his handling of the unpopular Iraq war.

Bush has apologized for the problems, which included dilapidated conditions at the flagship Walter Reed Army Medical Center and bureaucratic delays faced by troops seeking treatment for their injuries.

He said his proposals would streamline the paperwork that wounded veterans face, offer support for families of wounded soldiers such as unpaid work leaves, and bolster treatment for veterans suffering from psychological trauma.

"The need to enact these reforms into law is urgent, and I call on both Republicans and Democrats in Congress to come together and pass a good bill that I can sign into law," Bush said.

A Washington Post investigation in February found soldiers recuperating in a dilapidated building infested with mice, mold and cockroaches and cited cases of veterans grappling with bureaucratic red tape in their attempts to get health care.

Concerns have also been raised about mental health care.

One government report last year suggested that fewer than one in four U.S. troops returning from Iraq and Afghanistan who showed signs of Post Traumatic Stress Disorder was referred by the Pentagon for a mental health evaluation.

Bush in March named a commission to study the military health system and recommend changes.

Bush said his proposal reflects findings from the panel, which was led by former Health and Human Services Secretary Donna Shalala, a Democrat, and former Sen. Robert Dole, a Republican.

Shalala, who plans to testify on Capitol Hill on Wednesday and appeared with Bush in the Rose Garden, said the most crucial need is overhauling the disability system.

"We need a system in which any soldier, any sailor, any Marine, any member of their family understand it and can make it work," she said.

(Additional reporting by Matt Spetalnick)

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