RAMALLAH, West Bank — President Bush yesterday laid out his vision for a peace agreement between Israelis and Palestinians that he said should be reached this year, and aides indicated he's likely to return to the Middle East to see it through.

Bush said a deal should end the "occupation" since 1967 of Arab land by Israel and create a Palestinian state that is "contiguous," rather than the current split between the West Bank and Gaza. He urged creation of "new international mechanisms, including compensation" to resolve the issue of Palestinian refugees.

The president was less prescriptive about Jerusalem, which both sides claim as their capital. "I fully understand that finding a solution to this issue will be one of the most difficult challenges on the road to peace," he said. "But that is the road we have chosen to walk."

Bush's summation of where Israeli-Palestinian talks stand came after two days of shuttle diplomacy here, the first such visit by a U.S. president since 1998. Bill Clinton's effort to broker a deal failed in 2000.

Bush met with Israeli leaders in Jerusalem Wednesday and Palestinian leaders in this West Bank city yesterday. Later, he appeared animated about the chances for a peace deal to conclude his presidency.

"The peace agreement should happen, and can happen, by the end of this year," Bush said. "I know each leader shares that important goal, and I am committed to doing all I can to achieve it."

Stephen Hadley, Bush's national security adviser, said that likely would include another Bush visit to the Middle East this year. "I think you will see him back in the region at least one more time, and maybe more, before he leaves" office Hadley said.

Bush is expected back in May for Israel's 60th anniversary — something Palestinians don't consider a cause for celebration. "It's also the 60th anniversary of the demise of the Palestinians," said Diana Buttu, a political analyst and former spokeswoman for the Palestine Liberation Organization. She said Bush's visit produced more talk than concrete action.

As he prepared to leave Israel today for five Arab nations, Bush called on Israeli Prime Minister Ehud Olmert and Palestinian National Authority President Mahmoud Abbas to "make sure their teams negotiate seriously." He said Israel should stop expanding settlements and remove unauthorized outposts, while Palestinians must confront terrorists on Israel's borders.