President Bush said the election of a new Palestinian Authority (search) president Sunday is a key step toward the establishment of an independent and peaceful Palestinian state.

Bush, in a statement issued two hours after polls closed, called the election of Mahmoud Abbas (search) "a historic day for the Palestinian people."

"Palestinians throughout the West Bank (search) and Gaza took a key step toward building a democratic future by choosing a new president in elections that observers describe as largely free and fair," Bush said.

"The United States stands ready to help the Palestinian people realize their aspirations," Bush said. "The new Palestinian president and his cabinet face critical tasks ahead, including fighting terrorism, combatting corruption, building reformed and democratic institutions, and reviving the Palestinian economy."

Bush said the United States will help Abbas and the Palestinian people address the challenges and help create two states, Israel and Palestine, side-by-side in peace. He said other countries, including Israel, must do their part to create peace.

Abbas takes over after four decades of chaotic rule by Yasser Arafat, who died in November. Abbas has spoken out against violence and has the backing of the international community.