Bush was reacting to a question about an Israeli plan to expand the Maale Adumim settlement outside Jerusalem, which has angered Palestinian leaders who warn it could derail peace talks.
"Our position is very clear, that the road map is important, and the road map calls for no expansion of the settlements," Bush said six days before a scheduled summit at his Texas ranch with Israeli Prime Minister Ariel Sharon.
"I'm optimistic that we can achieve a peace in the holy land. I'm optimistic because I firmly believe that Ariel Sharon wants to have a peaceful partner, wants there to be a democracy in the Palestinian territories," said Bush.
"I believe Palestinian President Mahmud Abbas wants the same thing. And there's a lot of hard work to be done, but we're making progress," said Bush.
Privately, US officials expressed annoyance that news of the expansion came shortly before Bush was to host Sharon at his ranch - a diplomatic plum reserved for close allies - but tried to downplay its impact.
"Our position is very clear, that the road map is important, and the road map calls for no expansion of the settlements"
US President George Bush
A senior US State Department official said Israel's planned addition of 3500 housing units to Maale Adumim did not appear to be imminent and would probably not figure prominently in the summit next week.
It will probably be an agenda item, "but it's not going to be the main one. The main one is going to be how to make disengagement work so the Palestinians can get back some land and take effective control", the official said.
State Department spokesman Richard Boucher said the Americans were reiterating in pre-summit meetings that expansion of Jewish settlements was a violation of the US-backed peace road map aimed at the creation of an independent Palestinian state.
"We've been quite clear. We think their obligation is to stop settlement activity, period," he said.
Israel public radio quoted unnamed Israeli officials as saying that the planned expansion of the Jewish settlement would "not cloud" talks between Sharon and Bush.