BBC: The US secretary of state has said it is time for a Palestinian state to be founded, and that the US will put its full weight behind such efforts.
Condoleezza Rice said reaching a two-state solution was a priority for her and US President George Bush.
Ms Rice was speaking from the West Bank, where she has been trying to get agreement for a peace summit in the US.
Meanwhile the Israeli PM has hinted he may consider giving up Palestinian districts in Jerusalem in a peace deal.
Ehud Olmert told parliament "legitimate questions" could be asked about the Israeli annexing of outlying Palestinian neighbourhoods in East Jerusalem following the 1967 war.
Palestinians want East Jerusalem as the capital of a future state of Palestine, and the issue is one of the most sensitive and intractable of the Israeli-Palestinian conflict.
'It is time'
"Frankly it is time for the establishment of a Palestinian state," Ms Rice told reporters in a news conference which she held with the Palestinian leader Mahmoud Abbas.
She said the US regarded a two-state solution "as absolutely essential for the future, not just of Palestinians and Israelis but also for the Middle East and indeed for American interests".
She said Mr Bush would make finding a resolution a top priority of his time in office, and that she would devote her "last ounce of energy" to the issue. US 'wants Palestinian state now' (more)
Mark Alexander
