President George W. Bush urged Hezbollah (search) to disarm and to stay out of Israeli-Palestinian disputes, suggesting the militant group could shed its terrorist label and win U.S. backing for a role in Lebanon's political mainstream.

Bush's remarks appeared to offer Hezbollah a path toward legitimacy in the eyes of Washington, which has long regarded the Iranian-founded, anti-Israel group as a dangerous terrorist organization. Bush (search) said that view still holds but, in carefully phrased remarks, he emphasized the chance for Hezbollah to change its ways and its status.

"We view Hezbollah as a terrorist organization," Bush said Tuesday after a White House meeting with Jordan's King Abdullah II. "I would hope that Hezbollah would prove that they are not by laying down arms and not threatening peace."

Yet the conditions Bush set have been spurned repeatedly by Hezbollah. A U.N. Security Council resolution passed in December called for the disarmament of all militias within Lebanon, along with the withdrawal of Syria's considerable military presence and political influence.

Sheik Naim Kassen (search), Hezbollah's deputy leader, told The Associated Press last week that although the group intends to take a more active role in Lebanese politics, it won't disarm as long as the Palestinian-Israeli conflict persists and poses a potential need for Lebanon to defend itself against Israel.

Hezbollah, which draws strength from Lebanon's 1.2 million Shiites, is widely admired within the country and throughout the Arab world for forcing an end five years ago to Israel's 18-year occupation of the country's south. In addition to its guerrilla army — the most organized and best-armed faction in Lebanon — Hezbollah has an extensive social welfare program and nine lawmakers in the 128-seat parliament.

But the stakes are high for the 23-year-old movement, particularly with the approach of new Lebanese elections, scheduled for May. In the past month, as global pressure increased on Syria to get out of Lebanon, Hezbollah has sought to demonstrate its political power by organizing two huge pro-Syria rallies.

At the same time, there have been calls for the United States to support moves to nudge Hezbollah into mainstream political life in Lebanon as Washington pushes for an end to Syrian influence there. Maronite Cardinal Nasrallah Sfeir, a strong critic of Syria's control in Lebanon and a key opposition figure who supports the integration of Hezbollah, is due at the White House on Wednesday for a meeting with Bush.

While saying U.S. officials remain concerned that Hezbollah "may try to derail the peace process between Israel and the Palestinians," Bush, by focusing on the group's past activities, gave a sign that the group could gain legitimacy with a change in course.

"Hezbollah has been declared a terrorist organization by the United States because of terrorist activities in the past," he said.

Hezbollah continues to attack Israeli forces in a disputed area near Lebanon's border, and the United States and Israel accuse it of funding suicide bombers and Palestinian militant groups bent on undermining recently resumed Palestinian-Israeli negotiations.

Hezbollah denies that, as well as Washington's accusations that it is linked to pro-Iranian groups that carried out kidnappings and deadly suicide bombings targeting Americans during Lebanon's long civil war, including the attacks on the U.S. Marine barracks in Beirut in 1983 and on the U.S. Embassy annex there in 1984. Until the Sept. 11 attacks, Hezbollah was estimated to have killed more Americans than any other terror group.

Bush's move immediately triggered some criticism from Congress.

"Hezbollah has the blood of Americans on its hands and it is awfully difficult to forgive them so quickly, especially when they have not denounced terrorism," Sen. Chuck Schumer, a New York Democrat, said in a statement.

With renewed hopes for peace between Israeli and Palestinian officials a prime topic of discussion for Bush and Abdullah, the president created a bit of stir by saying that one obligation Israel must meet is to "withdraw from the settlements."

White House press secretary Scott McClellan clarified later that Bush was referring to Israeli Prime Minister Ariel Sharon's plan to evacuate some, but not all, Jewish settlements in Palestinian territories and to the demand in the administration's Mideast "road map" for Israel to freeze settlement building.