Mr Bush said the world should not rest until there was a lasting resolution to the conflict between the Israelis and the Palestinians.

Speaking in Brussels, Mr Bush said "no passing disagreement" could divide the US and Europe, whose friendship was vital for world peace and prosperity.

He urged greater European support for Iraq - "the world's newest democracy".

Our greatest opportunity, and our immediate goal, is peace in the Middle East George W Bush Bush speech excerpts Watch the speech

The speech came at the start of the US president's five-day visit to Europe.

Later on Monday, Mr Bush was dining with French President Jacques Chirac, one of the most outspoken critics of the US-led Iraq war.

Apart from Iraq, divisions also remain between the US and Europe over Iran's nuclear programme, EU plans to end the China arms embargo and the Kyoto treaty on global warming.

'New era'

Mr Bush devoted a large part of his speech to the Middle East, saying both Europe and the US were determined to see two democratic states - Israel and Palestine - living side by side in peace.

BUSH ITINERARY Monday: Talks with Belgian leaders, then gives speech on transatlantic relations. Dinner with French President Jacques Chirac Tuesday: Breakfast with UK Prime Minister Tony Blair. Meets Ukrainian and Italian leaders at Nato HQ, then meets EU leaders Wednesday: Leaves Brussels for Germany. News conference with Chancellor Gerhard Schroeder in Mainz, then meets US troops in Wiesbaden Thursday: Gives speech in Slovak capital, Bratislava, meets Russian President Vladimir Putin Diary: Waffle welcome At a glance: US/Europe divisions

"Our greatest opportunity, and our immediate goal, is peace in the Middle East," he said.

"We seek peace between Israel and Palestine for its own sake. We also know that a free and peaceful Palestine can add to the momentum of reform throughout the broader Middle East."

Mr Bush went beyond his usual formula of calling for calling for a contiguous Palestinian state in the West Bank. "A state of scattered territories will not work," he declared.

The remark was a sign to Israel not to squeeze Palestinians into little parcels of land joined by narrow corridors, says the BBC's Paul Reynolds.

The US president also urged European nations to give "tangible assistance" to Iraq.

"All nations now have an interest in the success of a free and democratic Iraq, which will fight terror, be a beacon of freedom and be a source of true stability in the region," he said.

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Mr Bush sought to heal divisions resulting from the Iraq war, calling for "a new era of transatlantic unity".

"No temporary debate, no passing disagreement of governments, no power on earth will ever divide us," he said.

America supported European unity because it needed a strong partner in the hard work of advancing freedom and peace in the world, he added.

In other remarks, Mr Bush said:

• Syria must end its occupation of Lebanon and its support for terror groups

• Iran should end its support for terrorism and not develop nuclear weapons

• The US and all European countries should place democratic reform at the heart of their dialogue with Russia

• The US and Europe must work together on climate change by researching and developing new technologies that encourage environmentally responsible economic growth

• The new Ukrainian government should be welcomed by the Euro-Atlantic family.

EU foreign ministers meeting in Brussels gave a positive response to the US president's speech by approving a plan to train senior Iraqi police officers and judges in the EU and in countries near Iraq.

The EU also issued a communique backing US calls for "an international investigation without delay" into the killing of former Lebanese Prime Minister Rafik Hariri last week.

Security operation

Environmental organisations, including Greenpeace, expressed disappointment with Mr Bush's comments on global warming.

However, in a spirit of reconciliation, EU leaders have been advised to avoid the US refusal to sign the Kyoto treaty on global warming and other contentious issues during Mr Bush's visit.

A huge security operation has been put in place for Mr Bush's five-day trip, with some 2,500 Belgian police and 250 US secret agents deployed in Brussels.

Thousands of protesters are expected to stage rallies during Mr Bush's first foreign tour since his second term in office began in January.

Mr Bush will meet German Chancellor Gerhard Schroeder - another critic of the Iraq war - in the German city of Mainz on Wednesday.

The US president will also hold a summit with Russian President Vladimir Putin in the Slovak capital, Bratislava, where he is expected to express concerns about a series of moves seen in the West as setbacks for Russian democracy.