"In light of new realities on the ground, including already existing major Israeli population centres, it is unrealistic to expect that the outcome of final status negotiations will be a full and complete return to the armistice lines of 1949," Bush said on Wednesday during a news conference with Sharon. 

The statement and letters Bush and Sharon exchanged could go a long way toward helping the Israeli leader push his plan to scrap 21 Jewish settlements in Gaza and four in the West Bank through a binding vote in his right-wing Likud party on 2 May. 

"These are historic and courageous actions," Bush said about the Gaza withdrawal. "If all parties choose to embrace this moment, they can open the door to progress and put an end to one of the world's longest-running conflicts." 

Negating right of return

The president also appeared to negate any right of return of Palestinian refugees to what is now Israel, saying they should be resettled in a future Palestinian state instead. 

Any US endorsement of a cementing of Israel's hold on land Palestinians want for a state would inflame the Arab world and further complicate efforts to stabilise Iraq, where US forces are under daily attack from resistance fighters. 

Israel has planted some 120 settlements in the West Bank since it captured the area along with the Gaza Strip in the 1967 Middle East war. Washington has long held settlements are obstacles to peace. 

Quick to react, Britain's Prime Minister Tony Blair welcomed Sharon's Gaza plan. "I welcome Prime Minister Sharon's announcement that Israel intends to withdraw the Israeli Defence Forces from the Gaza Strip and dismantle all Israeli settlements there as well as some in the West Bank," Blair said in a statement.

Palestinian condemnation

Quraya: "We reject this, we will
not accept it"

Palestinian Prime Minister Ahmad Quraya condemned Bush's endorsement. "Bush is the first US president to give legitimacy to Jewish settlements on Palestinian land. We reject this, we will not accept it," he told reporters at his West Bank home.

"We call on the (international peacemaking) Quartet - the European Union, the United Nations, the United States and Russia - to hold an international conference to discuss the neglect of Palestinian rights," Quraya said.

Senior Palestinian official Yasir Abd Rabbu said in Ram Allah: "Bush and Sharon are trying to protect each others' political future but are endangering the political future of Israel, the Palestinians and the whole region."  

Hours before Sharon and Bush met, Palestinian President Yasir Arafat issued an appeal not to give the Israeli leader any guarantees that could destroy the US-backed "road map," a violence-stalled peace plan that envisions a Palestinian state alongside Israel.