Blair, speaking after talks with both sides on Wednesday, was on the highest-level diplomatic mission to the Middle East since Yasir Arafat's death last month, which stirred fresh peace efforts after years of bloodshed.
But in signs of disagreement over priorities, every time Blair referred at a news conference with Palestinian leaders to the need to "stop terrorism", they pointedly said Israel must also halt settlement building in the occupied West Bank.
In earlier remarks after a meeting with Israeli Prime Minister Ariel Sharon, Blair rejected suggestions that Israel's limited, unilateral plan to pull out of tiny Gaza was meant to forestall a more significant West Bank pullout.
"I certainly have understood him [Sharon] to be saying very, very clearly that, provided terrorism stops, disengagement [from Gaza] is not the last word," Blair said. Sharon has vowed to keep large West Bank settlements under any conceivable peace deal.
Blair told both sides the international meeting he wants to host in February was designed to promote a moderate, democratic succession to Palestinian President Yasir Arafat, and defuse the four-year-old revolt being waged by resistance groups.
Blair, echoing the US and Israeli line, said a viable Palestinian state envisaged by a road map plan that US-led mediators aim to revive after Arafat's death could never come to pass unless Palestinians ended resistance attacks.
Mahmud Abbas (R) praised Blair
for the planned donors' meeting
"Viability cannot just be about territory, it also has to be about proper (Palestinian) democratic institutions, proper security ..." to persuade Israel it could live alongside a Palestinian state, he said in Jerusalem with Sharon alongside.
Ram Allah visit
Later in Ram Allah after talks with Mahmud Abbas, Blair made fewer references to Palestinian violence but said it must end for the parties to embark on the road map. Abbas is tipped to win a 9 January election to succeed Arafat.
"We can all say we can agree on the two-state solution, but quite frankly we have had paralysis for months and years on this process," he said.
Abbas praised Blair for organising a conference likely to marshal more international funding for Palestinian reforms, but suggested there should be equal international pressure on Israel.
"We expect from the Israeli side [at the same time] a stop to the expansion of settlements. We are very keen and concerned to catch up on the time lost from the last few years," Abbas said.
"We think addressing final status issues [for statehood] is extremely important. We are available to start very quickly on [such road map] negotiations."
Palestinian officials presented Blair's visit as a precursor to formal peace talks.
"We support British efforts to restart the peace negotiations. We will attend the proposed peace conference and we hope it lead to ... implementation of the road map," said senior official Tayib Abd al-Rahim.
Palestinian officials said Israel
must halt settlement building
Sharon has said Israel will not attend the conference and Blair found no problem with that since it would not address road map issues. Diplomats say Blair at first had grander peacemaking designs for the conference but scaled them back.
Speaking to Aljazeera, Hasan Abu Libda, secretary-general for the Palestinian cabinet, said the international community needed to pressure Israel if the road map talks were to be resumed successfully.
"The problem is ... the will of the countries sponsoring the peace process and the Quartet [US, Russia, EU and UN] to pressure Israel into accepting the conditions and commitments of the road map plan," Abu Libda said.
"The problem, from the first day of endorsing the plan, was Israel's non-abidance of the road map.
He added: "We are ready to resume implementing it and hope that Britain will use its weight and relations with the United States to enable the two sides to achieve progress."