Israeli and Palestinian leaders agreed Tuesday to seek a final-status peace accord by the end of next year - ending a seven year impasse. The parties, making the announcement at the U.S.-organized Annapolis conference, said the United States will monitor the process. Palestinian President Mahmoud Abbas and Israeli Prime Minister Ehud Olmert will meet separately with President Bush in Washington on Wednesday. VOA's David Gollust reports from the conference site at the U.S. Naval Academy in Annapolis.

The announcement of the commitment to seek a peace accord by the end of President Bush's term in office came in a surprise addition to Mr. Bush's opening address to the conference.

Sharing the stage at the Naval Academy with Israeli Prime Minister Ehud Olmert and Palestinian President Mahmoud Abbas, Mr. Bush read a joint statement by the principals pledging "vigorous, ongoing and continuing" negotiations for a two-state settlement of the conflict by the end of 2008.

The parties set up a steering committee to oversee the process that will begin its work December 12, to be supported by regular twice-monthly meetings by the two leaders.

They also committed to implement all their obligations under the largely unfilled 2003 peace road map of the international Middle East quartet - made up of the United States, Russia, the European Union and the United Nations . They said the United States will oversee the process.

In his address to the gathering of nearly 50 countries and international organizations, President Bush said the time is right for the peace-making drive because both sides have leaders determined to achieve peace and combat terrorism.

"A battle is under way for the future of the Middle East, and we must not cede victory to the extremists," said President Bush. "With their violent actions and contempt for human life, the extremists are seeking to impose a dark vision on the Palestinian people, a vision that feeds on hopelessness and despair to sow chaos on the Holy Land. If this vision prevails, the future of the region will be endless terror, endless war and endless suffering."

The policy statements of the two principals underlined the difficulty of the task ahead for negotiators.

President Abbas said Palestinians will insist on having the capital of their state in East Jerusalem, which Israel captured in the 1967 Middle East war, and on a resolution of all aspects of the problem of Palestinian refugees.

Mr. Abbas promised Palestinians a peace settlement that will give them independence and self-determination, and put them, he said, on equal terms will all other peoples of the world.

"Each one of you has his own her own personal pain, personal tragedy as a result of this conflict and as a result of the years of tragedy and occupation," said President Abbas. "These are very bitter years. Don't be depressed, don't lose confidence and hope, for the whole world today now is stretching its hand towards us in order to help us put and end to our tragedy, to our holocaust that has been running for too long."

Prime Minister Olmert, said Israel is not indifferent to the tragedies Palestinians have experienced, and that the envisaged negotiations will produce a "proper framework" for dealing with the refugee question as well all the other outstanding issues of the peace process.

"The negotiations will address all the issues which we have thus far avoided dealing with," said Prime Minister Olmert. "We do this directly, openly and courageously. We will not avoid any subject. We will deal with all the core issues. I am convinced that the reality that emerged in our region in 1967 will change significantly. This will be an extremely difficult process for many of us, but it is nevertheless inevitable."

The conference included many Arab countries, among them Saudi Arabia and Syria, that do not have diplomatic relations with Israel. Mr. Olmert urged them to stop, as he put it, "watching the peace train go by" and end their boycott of Israel.

Saudi Arabian Foreign Minister Saud al-Faisal, a key participant, joined in polite applause for the Olmert remarks though an aide said he would not shake hands with Israeli delegates, saying he was attending for reasons of substance and not "theatrics."