In a widely anticipated but relatively anti-climactic speech Monday, Secretary of State Colin Powell laid the blame for the Mideast peace morass on both Israelis and Palestinians and said they must both face up to the truth about what it takes to end tensions and live as neighbors.

Powell urged Palestinian leaders to arrest, prosecute and punish terrorists, saying "There must be real results, not just words and declarations."

Israelis also must do their part, Powell said in a speech at the University of Louisville. Too many Palestinians have grown up "with checkpoints, raids and indignities," he said.

Powell said American leadership will play a big role in the process, and announced that Williams Burns, assistant secretary of state for Near Eastern affairs, will return to the region and retired Marine Corps Gen. Anthony Zinni has agreed to serve as senior adviser to the secretary.

"We have a vision of a region where two states, Israel and Palestine, live side by side within secure and recognized borders," he said.

Powell said Palestinian-led violence only defeats the objective of reaching any beginning point to peace negotiations and feeds Israeli doubts about whether they really want peace.

"The intifada is now mired in the quicksand of self-defeating violence and terror directed against Israel," he said.

On the other hand, the secretary said, Palestinians too often have seen their schools shuttered and their parents humiliated.

"Occupation hurts Palestinians, but it also affects Israelis," Powell said, referring to the young soldiers who serve on the front lines of the conflict.

Last week, it was thought Powell would use the Louisville platform to announce a major policy initiative in the region, but over the weekend Powell made it clear that the United States already had a blueprint for peace.

"People keep asking for a new plan. We have a plan. It's a solid plan. It's called the Mitchell committee report," Powell said on "Fox News Sunday." He referred to a proposal by former Senate Majority Leader George Mitchell and others that calls for a cooling-off period free of violence, followed by confidence-building measures before any settlement talks could begin.

A Jordanian diplomat said over the weekend that he was encouraged Powell was making the speech. He also said he hoped Powell would highlight how crucial it is that prompt negotiations be held regarding outstanding issues between Israel and the Palestinians.

Bush and Powell have seized on statements by Israeli Prime Minister Ariel Sharon that he was open to the idea of a Palestinian state in the framework of an overall settlement with Yasser Arafat.

Sharon also is open to talks in Washington with Bush and Powell in early December, but none have been scheduled yet.

The prime minister's statements on Jerusalem are far short of the deep territorial concessions, including surrendering part of Jerusalem, offered to Arafat by Sharon's predecessor, Ehud Barak.

Arafat did not accept the offer, even though it also had the strong support of then-President Bill Clinton, and the Palestinian uprising, or intefadeh, against Israel accelerated.

The Bush administration has concentrated on trying to reduce the violence, which has claimed hundreds of lives. However, it is eager to shed an image of aloofness to the Arab-Israeli conflict. Also, Arab and Muslim governments who are supporting the U.S. war against the Taliban in Afghanistan are clamoring for the administration to pressure Israel to yield to Arafat.

Recently, the Bush administration shifted from its relatively detached approach to peacemaking and an almost exclusive focus on trying to end the fighting, to supporting a Palestinian state on land held by Israel and signaling Arafat that Bush was willing to meet with him.

The Associated Press contributed to this report.