Carter also said that Arab countries must also recognise Israel's "right to exist and its right to security" during a speech on Wednesday.
He also warned that President George Bush was probably too busy to focus on settling the Palestinian-Israeli conflict because of other pressing international issues.
"It would be impossible today for President Bush to go in immersion at Camp David with Israelis and Palestinians for 13 days to work out an agreement," he said, recalling his own experience.
He noted it was exactly 25 years ago ahead of the signing of the historic Camp David peace accords with Israel and Egypt.
Bush has too much on his plate to
focus on Middle East, says Carter
At the time, Carter was in the Maryland mountain retreat joined by Egyptian President Anwar Sadat and Israeli Prime Minister Menachem Begin. After 13 days of private talks they emerged and signed the first agreement ever between Israel and an Arab neighbour.
"The president has so many foreign policy problems on his desk," Carter said, referring to the occupation of Iraq, concerns with North Korea's nuclear designs, the so-called war on terror and nuclear arms proliferation.
Carter said the "road map" for Middle East peace including the creation of a Palestinian state by 2005 was "identical with the basic premises of Camp David, Oslo and the Declaration of Principles," the first peace pact between Israel and the Palestinians signed in Washington 13 September, 1993.
Speaking at the Woodrow Wilson International Centre for Scholars, he said a solution could only come when Israel stopped its illegal settlement policies, and Arab countries recognised Israel's right to exist and its right to security.