WASHINGTON, Dec 7: US President George Bush and British Prime Minister Tony Blair on Thursday endorsed a bipartisan panel’s conclusion that any resolution of the Iraq conflict is tied to reducing tensions between Palestinians and Israelis and also across the broader Middle East.

The endorsement came at a joint news conference in Washington with Mr Blair, who has long held the view that the situation in Iraq is linked to the Arab-Israeli conflict.

“It is important that we do everything we can in the wider Middle East to bring about peace between Israel and the Palestinians,” Mr Blair said.

“I appreciate your clear view that we are confronted with a struggle between moderation and extremism and this is particularly evident in the broader Middle East," Mr Bush told his chief ally on Iraq.

Mr Blair said he plans a mission to the Middle East to talk with the Israelis and Palestinians.

But in Tel Aviv, Israeli Prime Minister Ehud Olmert said he disagreed with the observation of the Iraq Study Group that stability in Iraq was linked to the greater Middle East. The Israeli leader also rejected the panel’s proposal to engage Iran and Syria for ending the bloodshed in Iraq, saying that conditions were not ripe to reopen long-dormant talks with Syria.

In its report given to Mr Bush on Wednesday, the blue ribbon panel noted that the United States cannot achieve its goals in the Middle East unless it deals directly with the Arab-Israeli conflict and regional instability.

“There must be a renewed and sustained commitment by the United States to a comprehensive Arab-Israeli peace on all fronts: Lebanon, Syria, and President Bush’s June 2002 commitment to a two-state solution for Israel and Palestine,” the panel said.

“This commitment must include direct talks with, by, and between Israel, Lebanon, Palestinians (those who accept Israel’s right to exist), and Syria.”

At the joint news conference, President Bush acknowledged that the panel's call for a major course change in Iraq was an important document, but just one of several reports he will consider as he charts a new strategy.

Standing alongside Prime Minister Blair, Mr Bush admitted that “it's bad in Iraq’.

Earlier, Mr Bush told US lawmakers that `there're some very good ideas’ in the panel’s report. “Not all of us around the table agree with every idea, but we do agree that it shows that bipartisan consensus on important issues is possible,” said Mr Bush.The 142-page report offers 79 recommendations for resolving the crisis in Iraq. But it makes no mention of potential victory, serves up no bromides about exporting democracy to the region and makes no promises the situation will not descend into total chaos.

Mr Bush said that his administration wanted to `fashion … a new way forward in Iraq, a new look, to achieve our objective of a country which can sustain itself, govern itself, defend itself and be an ally in this war against extremism and terrorism’.

"It's a tough time and it’s a difficult moment for America and Great Britain and the task before us is daunting," he said.

The British prime minister, who has stood shoulder to shoulder with Mr Bush since the March 2003 invasion of Iraq, said he welcomed the conclusion of the Iraq Study Group despite its criticism of past policies.

It `offers a strong way forward’, Mr Blair said. “The consequences of failure are severe.”

Mr Bush is under no obligation to accept the panel’s recommendations and he has sought a similar input from the Pentagon and other sources.

No longer can Mr Bush turn anywhere in Washington without being told that mistakes have been made and stability in Iraq may not be attainable.