Bush was forced to travel by car to meet Mahmoud Abbas, the Palestinian president, in the West Bank after his helicopter was grounded by bad weather.
The journey took him through an Israeli security checkpoint and within sight of the separation barrier.
Bush said that he could understand why Palestinians were "frustrated" by the checkpoints, but they were necessary to "create a sense of security for Israel".Pain and humiliation
Al Jazeera's David Chater in west Jerusalem said that the remarks were extraordinary given the pain and humiliation that is caused at the checkpoints.
"I remember once in Hawara, one of the checkpoints outside Nablus, and I was doing the story of a family who lost their main loved one ... he was a cancer patient and he was told to get out of his car and walk across the checkpoint, and that killed him," he said.
"That's the experience that most Palestinians have of these humiliating checkpoints ... it was very much in bad taste and was a joke that will not have gone down well with anyone in Gaza or the occupied West Bank."
The US president met Abbas at the Palestinian Authority's headquarters on the second day of his Middle East tour aimed at bolstering peace talks.
Bush said he believed that the Palestinians would sign a treaty with Israel to establish their own state before he leaves office in about one year.
"And I believe it's possible - not only possible, I believe it's going to happen - that there be a signed peace treaty by the time I leave office [in January 2009]," he said.'Contiguous territory'
The US president said that any future Palestinian state must be a "contiguous territory" rather than a patchwork of Palestinian-controlled areas divided by Israeli checkpoints and Jewish settlements.
"Swiss cheese isn't going to work when it comes to the territory of a state."
Abbas urged Bush to press Israel to halt Jewish settlements and ease security restrictions in the occupied West Bank that Palestinians say cripple their society and economy.
Bush also urged Israel, which frequently mounts raids into the West Bank, not to take action that undermines Abbas's security forces.
"There needs to be a fair amount of work to modernise the [Palestinian] security forces... my message to Israelis is that they ought to help, not hinder [them]," he said.
On the issue of the Gaza Strip, which has been entirely under the control of the Hamas movement since June last year, Bush said: "There is a competing vision in Gaza."
He said the people of Gaza need to choose between Hamas, which has "delivered nothing but misery", and "those who have negotiated a peace settlement".
But in another comment likely to draw Palestinian ire, Bush said that the two parties should leave behind unimplemented UN resolutions, such as those calling for the removal of Israeli settlements and a right of return for Palestinian refugees.
"The UN deal didn't work in the past... this is an opportunity to move forward and negotiate a new deal," he said.'Totally disconnected'
Marwan Bishara, Al Jazeera's senior political analyst, said that there was a sense that Bush was making an effort with the peace process.
"He really wants to leave a legacy of a peace-maker between the Israelis and the Palestinians," he said.
|Bush visited the Church of the Nativity |
but declined to tour Bethlehem [AFP]
"On the other hand his discourse in the press conference shows that he has either been poorly briefed or he is totally disconnected from the Palestinian-Israeli reality,"" he said.
After meeting Abbas in Ramallah, Bush flew by helicopter to Bethlehem to visit the Church of the Nativity, built over the traditional birthplace of Jesus.
There the president, a devout Christian, spoke of his hope for a divine gift of freedom for all people and an end to the walls and checkpoints that ring the Palestinian town.
However, Al Jazeera's Jacky Rowland said that residents felt "that their whole city has been put under curfew, effectively for a visit that's for them devoid of meaning".
The Palestinian minister of tourism said she had tried unsuccessfully to persuade the US president to take a walking tour of Bethlehem - where the Israeli separation wall almost encircles the town, choking off its economy - in order to understand the situation there.