Secretary of State Condoleezza Rice (search) says the new Palestinian government must get tougher on terrorists like those responsible for a bombing that rattled the resurgent Mideast peace process.

But she is praising both Israelis and Palestinians for showing restraint. She also says other countries must help the Palestinians' president, Mahmoud Abbas (search), by contributing money and political support.

The secretary was attending a British-led conference on Palestinian reform, where she planned to meet with Abbas on Tuesday.

The conference is intended to help bolster the Palestinian Authority (search) ahead of Israel's planned withdrawal from the Gaza Strip and four settlements in the West Bank and to prepare for eventual statehood.

The suicide bombing outside a Tel Aviv nightclub on Friday killed five Israelis. Israelis and Palestinians are waiting to see if Israel pulls away from the peace process or if Abbas is powerless to stop further attacks.

"Obviously, when you have Palestinian Islamic Jihad taking responsibility, then something needs to be done about that because they are clearly challenging directly the Palestinian Authority," Rice said en route to London on Monday.

Even so, she said, "We are not in any way distressed by the response to this on either side. I think it's shown considerable maturity on the parts of the parties to know there are going to be some ups and downs and we'll have to get through them."

The London conference, in addition to aiding Abbas' government, is meant to underscore other countries' insistence that he take on terrorists as well as petty crooks.

President Bush has pledged $350 million for the Palestinians this year, although Congress has not yet given its approval. None of the money would go directly to the Palestinian Authority.

U.S. leaders believe Palestinian violence and Israeli crackdowns and settlement activity have delayed progress in a peace framework the United States helped lay out in the Clinton administration.

It is not clear that Abbas can build and maintain an effective government while contending with terrorists and naysayers among his own people.

Other countries must help, including by donating money to the Abbas government, Rice said.

"The strengthening of the Palestinians on the economic front, so that there is something to show for the Palestinian people from a Palestinian Authority that is dedicated to peace, is an important part of getting a better environment in the Palestinian territories," Rice said.

The Palestinians hope to secure pledges of more than $500 million from Arab states and others at the one-day session.

The Bush administration has tentatively embraced Abbas as a potential peace partner after the death of Yasser Arafat, the Palestinian leader whom Bush wrote off early in his first term.

Rice went to Abbas' West Bank headquarters on her first trip abroad as Bush's chief diplomat. Bush has invited Abbas to the United States this spring.