Israeli Prime Minister Ehud Olmert said Monday he does not believe his government and the Palestinian leadership will be able to achieve their stated goal of a forging a peace deal by the end of the year.

Speaking to the parliament's Foreign Affairs and Defense Committee, Olmert said conflicting claims to Jerusalem were unlikely to be resolved that quickly, although gaps on other key issues, such as borders and the future of Palestinian refugees, were not as wide.

"I don't believe that understandings that will include Jerusalem can be reached this year," an official present at the closed-door committee meeting quoted him as saying. "There is no practical chance of reaching an overall understanding on Jerusalem."

The official spoke on condition of anonymity as the committee does not formally release details of its meetings to the media.

At a U.S.-sponsored peace conference in Annapolis, Maryland last year, Israel and the Palestinians pledged to seek a peace agreement by the end of 2008, shortly before Bush leaves office in January. In recent months the sides have begun to scale back the goal, saying only the outline of a peace deal was possible in that time frame.

However, Olmert's comment on Monday was the clearest indication yet that the Israeli leadership sees the timeline as unrealistic.

Abbas aide Nabil Abu Rdeineh said Olmert's comments showed Israel had given up on its promise.

"This is a clear violation of the Annapolis agreement," he said. "It's prejudging the result before the end of the year. We still have six months, and that means Israel isn't serious about reaching an agreement according to Annapolis and Bush's vision."

Prospects for a peace deal have been hampered by Hamas militants' takeover of the Gaza Strip, a weak Palestinian leadership in the West Bank and a string of corruption probes in Israel that are threatening to topple Olmert.

Referring to recent attacks on Israelis in Jerusalem by local Palestinians of the city, Olmert said there was no way of preventing such incidents as long as the approximately 270,000 Arab residents — about one-third of the city's population of 750,000 — retain the freedom of movement they have at present.

"If we continue the present situation we must take into account that residents of Jerusalem can move freely around the entire country and there is no way of knowing what they might do," the official quoted him as saying. "There will be bulldozers, trucks and private cars and no way of preventing terror attacks of this kind."

Last week a Palestinian rammed a construction truck into three cars and a bus in downtown Jerusalem, injuring five people before he was shot dead by a passer-by.

Earlier this month another Palestinian plowed his front-end loader into a string of vehicles and pedestrians on a busy Jerusalem street. Three people were killed in that attack and dozens were wounded before an off-duty soldier shot and killed the assailant.

Israel captured east Jerusalem in 1967, annexing it and granting Jerusalem's Palestinians Israeli ID cards — unlike Palestinians in the West Bank and Gaza. Palestinians want east Jerusalem as the capital of their future state. An explosive sticking point is the Old City, home to holy sites claimed by both sides.

In past peace talks, the fate of Jerusalem proved to be the biggest stumbling block to any agreement.

Israel's West Bank separation barrier cuts off some outlying Arab neighborhoods from the city but in the wake of the recent attacks, some prominent Israelis, including Vice Premier Haim Ramon, have urged that the barrier be rerouted to bar more Arab sections.