Blair 'optimistic' over Middle East

The former prime minister, who is a peace envoy to the Middle East Quartet, was speaking after a meeting in Jerusalem with US president George Bush, who is on a tour of the region.

Mr Bush stated on Thursday that he thought his goal of an agreement before his term of office ended next January was possible. Asked if he agreed with Mr Bush, Mr Blair said: "Sure, it is absolutely possible to have a peace deal by the end of the year if people want to make it happen."

But to achieve this, those involved had to be prepared "to have the courage to take the difficult decisions to make the difficult compromises", he said.

Mr Blair's comments come following two days of separate talks with Israeli and Palestinian leaders. Mr Blair said people underestimated the determination of Mr Bush and US secretary of state Condoleezza Rice, who he described as "absolutely and totally committed" to finding a solution.

He said: "I think given the determination there is to succeed and given the desire on the part of the American leadership, the Israeli leadership, the Palestinian leadership to see it happen, I think people could be surprised this year.

"People in Israel - they don't want to pay the price of the world's desire to have a peace deal, and I totally understand that and I am a strong supporter of the state of Israel, and this should only happen under terms which guarantee Israel's security.

"But if we can achieve those terms and give the Palestinian people a state, then I think there is nothing more important in the battle against... extremism and terrorism that is fairly deep-rooted in many parts of the world today."

Mr Bush has said that a peace accord will require "painful political concessions" by both Israelis and Palestinians. Resolving the status of Jerusalem would be hard, he said, and he called for the end of the "occupation" of Arab land by the Israeli military.

Mr Blair said there was "no option" but to have both a state of Israel and a state of Palestine "living side by side". He added that in the longer-term most "sensible Israelis" knew the only real solution to security problems was a peace deal with the Palestinians.