President Bush yesterday launched a fresh effort to kick start the Middle East peace process by backing his old ally, Tony Blair, with promises of American diplomatic and financial support.

President Bush pledged an extra $80 million (£40 million) of US aid to the Palestinian Government of Mahmoud Abbas, as well as announcing plans for an international peace conference involving Israel and its Arab neighbours this autumn.

“We are showing the Palestinian people that a commitment to peace leads to the generous support of the United States,” said Mr Bush. “The Palestinian people must decide that they want a future of decency and hope, not a future of terror and death.”

His speech came as Mr Blair prepared to begin his new job on Thursday, when the former Prime Minister will meet the Quartet of Middle East peace brokers – the US, the European Union, the United Nations and Russia – who have appointed him as their special envoy to the region.

Blair casts himself as EU president candidate

Speaking on French TV, Tony Blair sang the praises of the EU and sketched his agenda for its future, all in fluent French

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Before that meeting in Lisbon, Mr Blair is expected to embark on a whistle-stop tour of European capitals including Brussels, Rome and Madrid to generate further momentum for the initiative.

He is known to have spoken in recent days to Mr Bush and Condoleezza Rice, the US Secretary of State, raising hopes that he might yet secure the sustained US commitment to the Middle East peace process which he had long sought – but never achieved – while still in Downing Street.

Dr Rice cancelled a planned trip to Africa yesterday to concentrate on the Middle East and the meeting in Portugal this week. Mr Bush said that she would lead the autumn conference, which will be one of the few times in recent years when Israeli, Palestinian and Arab leaders have met around the same table.

The new strategy appears to be built around isolating Hamas, which the West regards as a terrorist organisation, following what Mr Bush described yesterday as its “lawless and violent takeover” of Gaza. President Abbas’s Government has fled to the West Bank where it has since been given access to American and European money frozen since Hamas won parliamentary elections last year.

Mr Bush said that the events in Gaza provided a “moment of clarity for all Palestinians”. On one side, he suggested, were “murderers in black masks” and summary executions, on the other was the “vision of a peaceful state called Palestine and a homeland for their people”.

Ehud Olmert, the Israeli Prime Minister, met for several hours yesterday with Mr Abbas – who heads the secular Fatah party – to discuss measures to bolster the Government in the West Bank.

They are finalising a list of 250 Fatah prisoners to be released as a goodwill gesture towards Mr Abbas. Mr Olmert has resisted calls by his security chief to only release minor criminals or those at the end of their sentences, officials said. He is insisting on the release of prisoners serving long jail terms for security offences and, in return, almost 200 Fatah fighters have pledged to end their attacks on Israel.

Mr Bush made clear that there was responsibility on both sides to create peace. The Palestinians must renounce violence and arrest terrorists, while Israel’s “clear path” must include removing unauthorised outposts on the West Bank and halting the expansion of settlements.

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