Hundreds of Israelis and Palestinians joined Nobel Peace Prize (search) winners Monday for a ceremony filled with song and hope, celebrating an unofficial peace accord intended to guide their peoples out of conflict.

The "Geneva accord" has not been endorsed by either the Palestinians or Israel. But the plan has raised hopes that there may still be a way out of more than three years of violence.

The proposal tackles issues that have torpedoed other peace efforts: the fate of Israeli settlements, the borders of a Palestinian state, the status of Jerusalem and Palestinian refugees.

"The alternative, and the only alternative, to this initiative is sustained and permanent violence," former President Jimmy Carter (search) told the conference. "It is unlikely that we shall ever see a more promising foundation for peace."

The Geneva plan has been welcomed by U.S. Secretary of State Colin Powell (search), U.N. Secretary-General Kofi Annan (search) and European leaders. The Israeli and Palestinian organizers of an alternative peace plan are set to meet with Powell in Washington in the next week or so.

But violence continued in the Mideast Monday, with the Israeli military killing three men and a boy during a raid against suspected militants in the West Bank city of Ramallah.

Also, an Israeli developer began construction of a Jewish neighborhood in the section of Jerusalem claimed by the Palestinians. The project would be the first new Jewish neighborhood in east Jerusalem since two contentious developments in the late 1990s.

The Palestinians want east Jerusalem as the capital of a future state. Israel says the entire city is its capital.

Frustration over the continuing violence led activists to draft the Geneva accord, which envisions a Palestinian state based roughly on the borders before the 1967 Mideast war. Most Israeli settlements in the West Bank and Gaza Strip would be dismantled. It divides sovereignty in Jerusalem, but avoids a large-scale return to Israel by Palestinians who fled or were driven out in the 1948-49 war that followed Israel's creation.

"(It's) a clenched-teeth compromise with painful concessions on both sides," said Israeli author Amos Oz, who was a part of the talks.

Monday's event, hosted by actor Richard Dreyfuss, included performances by Palestinian and Israeli musicians and optimistic speeches from the accord's brokers.

Two Nobel Peace laureates, Northern Ireland peace negotiator John Hume and former Polish President Lech Walesa, spoke of their successful efforts to resolve conflicts in their countries.

In Washington, the State Department praised the effort but emphasized that it stands by the "road map" peace plan.

"We welcome efforts such as these ... to introduce issues, discuss issues and consider issues that have to be dealt with down the road," it said.

The road map, meant to end three years of violence and pave the way toward an independent Palestinian state by 2005, forbids any new Israeli "settlement activity." It also requires the Palestinians to dismantle militant groups, which they refuse to do. U.S. envoy William Burns met with Israeli officials Monday in hopes of reviving the plan.

In a dramatic turnaround after a lukewarm initial response, Palestinian leader Yasser Arafat sent a message warmly praising the Geneva plan, calling it "a brave initiative that opens the door to peace."

However, he did not explicitly endorse the agreement.

Members of Israel's government have called the plan subversive and criticized it for not explicitly ruling out the "right of return" for Palestinian outside Israel.

"Creating the impression that this is some sort of alternative ... causes some damage to Israel and is just a repetition of mistakes," said Raanan Gissin, an adviser to Israeli Prime Minister Ariel Sharon.

"There's no giving up of the right of return. There's no mention of the Jewish people having the right to a Jewish state in their ancestral homeland," Gissin said.

There was no formal signing of the agreement at Monday's event, but following their speeches, former Israeli Justice Minister Yossi Beilin and former Palestinian Information Minister Yasser Abed Rabbo clasped hands, bringing the audience to its feet amid thunderous applause.

The event was sealed with a song called "Generation Demands Peace," sung by Palestinian and Israeli musical groups.