The deadliest Palestinian bombing in Jerusalem in six years has set back but not derailed President Bush's plan for getting a Palestinian state off the ground.
Meanwhile, Bush was considering sending Secretary of State Colin Powell on a peace mission to the Middle East.
The violence "is setting back chances for peace," State Department spokesman Richard Boucher said Tuesday. But he and White House officials said the administration would press ahead.
The president's announcement of his strategy for Palestinian statehood will be delayed at least until Thursday or possibly Friday while he completes his options and puts some distance between his announcement and the terror attack that killed nearly a score of Israelis as well as the Hamas bomber, White House officials said.
Further complicating the situation, Israel said that in response to the bombing it would retake parts of the West Bank and hold them as long as terror attacks continue.
Bush envisions a step-by-step process on Palestinian statehood, with each step conditioned on changes designed to develop a democratic state that would live in peace alongside Israel.
The president's proposal will make hefty demands for Palestinian reforms, making them a requirement for statehood, said a senior White House official, speaking on condition of anonymity.
Bush is considering proposing a specific date for Palestinian statehood, though aides say he is leaning toward leaving the deadline somewhat more vague.
He plans to ask Israel to end settlements, as he did in April, and renew his call for a peace conference that focuses on Palestinian security measures.
Bush is not expected to address the status of Jerusalem, though he has not ruled out weighing in on some of the other border issues.
Already, there is Arab skepticism that Bush will go far enough to satisfy Palestinian aspirations, while Israeli Prime Minister Ariel Sharon says even a limited Palestinian state is premature.
A senior U.S. official said Powell could leave for the Mideast as early as next week, but Bush had not yet made a decision.
The idea was under consideration even before the latest terror attack, said the official, speaking on condition of anonymity.
"The president condemns this act of terror in the strongest possible terms," White House spokesman Scott McClellan said as Bush and his aides huddled for a second day on the pending presidential declaration on Palestinian statehood.
McClellan insisted the bombing of a crowded bus does not affect Bush's plans. "It's important for us to continue to move forward on the endgame," McClellan said.
On Capitol Hill, Sen. Joseph R. Biden Jr., D-Del., urged Bush to "press ahead with his plan to lay out his vision for the region, based on security for Israel's beleaguered citizens and an eventual Palestinian state willing to live in peace with its neighbors."
Biden, who is chairman of the Senate Foreign Relations Committee, said the Palestinians and other Arabs should condemn terrorism and do everything in their power to stop it.
Edward S. Walker, a former U.S. ambassador and assistant secretary of state, was sharply critical of the Bush administration.
"Nobody is going to find a White House peace plan credible at this point," he said.
Now president of the Middle East Institute, a private research group, Walker said the Bush administration had "sowed confusion in the region." On a recent visit to six Arab countries, Walker said, he "couldn't find a soul who knew what U.S. policy was and there was a great deal of concern the United States was driven by an internal debate between the Pentagon and the State Department."
Walker did say he approved of the administration's efforts to promote democracy in the Palestinian Authority and coordinate financial assistance to the Palestinian people.
Administration officials had said Monday night Bush would announce a proposal for Palestinian statehood Tuesday or Wednesday that would require democratic reform in a movement long dominated by Yasser Arafat.
"The violence makes it more difficult to proceed down this path" to peacemaking, Boucher said. Specifically, Boucher said, it has "changed political perceptions in Israel."
However, Boucher said, "we continue to look for ways to move forward" in the Middle East.
Boucher urged Arafat and the Palestinian Authority to signal clearly that terror was unacceptable. He said it was hurting Palestinians' chances for statehood. And he accused elements of the Palestinian security operation of having ties to terror groups.
Hamas, an organization described as terrorist by the State Department, took responsibility for the attack in Jerusalem.
Powell went to the Middle East in April for talks with Israeli Prime Minister Ariel Sharon and Arafat. More recently, CIA Director George Tenet and Assistant Secretary of State William Burns traveled there.
But U.S. efforts to promote peace and improve security have not panned out.
On Monday, hours before the bombing, the State Department chided Israel for attempting to screen out homicide bombers with an electronic fence the length of the West Bank.