President Bush on Monday announced an an international conference this fall to include Israel, the Palestinian authority and some of their Arab neighbors to help restart Mideast peace talks and review progress in building democratic institutions.

He said that Secretary of State Condoleezza Rice would preside over the session. Bush said the conference would include representatives from Israel, the Palestinians "and their neighbors in the region" and said participants would include just those governments that support creation of a Palestinian state.

Bush also pledged increased U.S. aid to the Palestinian government of President Mahmoud Abbas and called for the convening of a meeting of "donor" nations to consider more international aid, including the Arab states of Saudi Arabia, Egypt and Jordan.

Bush said the past few years had see "some hopeful, some dispiriting" changes in the Middle East. And he called the present time "a moment of clarity for all Palestinians. And now comes a moment of choice."

Bush voiced strong support for Abbas and his moderate Fatah government. Abbas controls just the West Bank after the Islamic militant group Hamas gained authority over Gaza in June.

He said Abbas and his new prime minister, Salam Fayyad, "are striving to build the institutions of a modern democracy."

Bush contrasted his government with Hamas, which he said "has demonstrated beyond all doubt that it is devoted to extremism and murder."

Only the Palestinians can decide which of these two paths to follow, Bush said.

He noted that the United States has pledged more than $190 million in direct assistance to the Palestinians, most of it already approved and that the Overseas Private Investment Corporation, a quasi-governmental unit, was making another $228 million available in loan guarantees.

Administration officials said that Bush would await recommendations from former British Prime Minister Tony Blair before deciding whether asking Congress for more.

Blair was recently named as special envoy to the region by the "Quartet" of Mideast peace makers — the U.S., European Union, United Nations and Russia.

That group meets in Portugal on Thursday, at which time Rice and other international negotiators will meet with Blair as he begins his new assignment. Snow said that Bush had discussed his new proposals with Blair.

Bush also announced that his administration will "make a direct contribution of $80 million to help Palestinians reform their security services."

"We will work with Congress and partners around the world to provide additional resources once a plan to build Palestinian institutions is in place," he said. "With all this assistance, we are showing the Palestinian people that a commitment to peace leads to the generous support of the United States."

The fall conference among Palestinian and Israeli officials and other countries in the region would be a way to prod the peace process. It would be one of the few times that Israelis and Arab leaders have met jointly to work out their differences.

Rice "and her counterparts will review the progress that has been made toward building Palestinian institutions," the president said.

"They will look for innovative and effective ways to support further reform. And they will provide diplomatic support for the parties in their bilateral discussions and negotiations so that we can move forward on a successful path to a Palestinian state," he added.

Bush also called on Israel to remove unauthorized outposts in Palestinian territory and end settlement expansion. And he urged Israel to continue releasing tax revenues to the Palestinian authority.

Bush said he would "continue to deliver a firm message to Hamas: You must stop Gaza from being a safe haven for attacks against Israel. You must accept the legitimate Palestinian government, permit humanitarian aid in Gaza and dismantle militias. And you must reject violence and recognize Israel's right to exist and commit to all previous agreements between the parties."

Earlier, after a meeting Monday in Jerusalem between Israeli and Palestinian leaders, Palestinian negotiator Saeb Erekat talked about Bush's upcoming announcement. "I think it's a clear-cut endgame here. We are talking about President Bush's vision of a two-state solution," said Erekat.

He added that Bush should address "how do you translate this from a vision to a realistic political track? How do you move from a policy of what's possible to a policy of what is needed?"

"In order to restore credibility and integrity to the peace process, the people of this region, Palestinians and Israelis, must start seeing deeds and not merely words," Erekat said.

Five years ago, Bush called for a separate, independent Palestine alongside Israel. He was the first U.S. president to back that notion so fully and publicly. But his administration has been accused of letting the peace process drift — and has been heavily criticized — while conditions worsened for the impoverished Palestinians.

Bush said that in terms of creation of a Palestinian state, there is "a level of consensus never before seen on this crucial issue" and vowed more aggressive U.S. involvement.

"Iraq is not the only pivotal matter in the Middle East," the president said.