Secretary of State Condoleezza Rice on Thursday all but conceded that an Israeli-Palestinian peace deal by a year-end target is no longer possible.

But she also said upon arriving in the region that "it is important to maintain momentum and support for the negotiations."

En route to the Middle East for her eighth trip to Israel and the Palestinian territories since the parties set the timeline for reaching an agreement at last November's summit at Annapolis, Maryland, Rice told reporters in her traveling party that political uncertainty in Israel was the main complication.

"It is our expectation that the Annapolis process has laid groundwork which should make possible the establishment of a Palestinian state when the political circumstances permit," Rice said. "I think that whatever happens by the end of the year, you've got a firm foundation for quickly moving this forward to conclusion."

Although Rice refused to rule out the chance of an agreement by year's end, her remarks reflect the first time that an official of the Bush administration has publicly not held out hope that the deadline could be met.

"We'll see where they are at the end of the year," said Rice, vowing to "work on this with the parties until the day that we leave."

Bush's term ends Jan. 20, when President-elect Barack Obama will be sworn in as his successor.