JERUSALEM — It didn't take long for President Bush's ambitious Middle East peace initiative to collide with a sobering reality.

After setting aside their differences for a few days last week while they welcomed Bush, Israeli and Palestinian leaders have quickly been consumed by developments that threaten to overwhelm Bush's plan.

Six days after Bush personally appealed for his support, conservative Israeli lawmaker Avigdor Lieberman abandoned Prime Minister Ehud Olmert's coalition government yesterday.

"All negotiations based on territory for peace are a fateful error, an incomprehensible mistake," Lieberman said yesterday.

Yesterday also was the second straight day of stepped-up Israeli military operations in the West Bank and Gaza Strip, which began hours after Israeli and Palestinian peace negotiators began their first substantive round of peace talks.

"Talking about having all the problems settled by January 2009 is an illusion," said Zalman Shoval, a former Israeli ambassador to the United States. "I think it was clear before — and it is certainly clear now."

Undeterred, Bush wrapped up his eight-day Middle East mission yesterday with a stop in Egypt, where he told President Hosni Mubarak that he'd invest serious political capital in trying to resolve the Israeli-Palestinian conflict this year.

"When I say I'm coming back to stay engaged, I mean it," Bush told reporters after meeting with Mubarak in Sharm el Sheik. "And when I say I'm optimistic we can get a deal done, I mean what I'm saying."

However, Lieberman's defection from the Israeli government and the renewed fighting in Gaza cast a pall over Bush's hopes of securing a peace deal before he leaves office next January.

In two days of raids, firefights and airstrikes, the Israeli military killed more than two dozen Palestinians, including the oldest surviving son of Mahmoud Zahar, a leader of the militant Islamic group Hamas, hospital officials in Gaza said.

Yesterday an Israeli airstrike in Gaza City killed three innocent civilians, including a 14-year-old boy, the Israeli military and Gaza hospital officials said.

Palestinian Authority President Mahmoud Abbas called the Israeli operation a "massacre," and his allies urged him to walk out of peace talks with Olmert. Gaza militants have responded by launching dozens of crude rockets into southern Israel in strikes that lightly injured several people.

In a rare cross-border shooting, a Palestinian sniper killed a young Ecuadorian farmer volunteering on an Israeli kibbutz just outside the Gaza Strip on Tuesday.

While the protracted fighting threatens to undermine Abbas and strengthen Hamas and other militant groups that oppose negotiating with Israel, Lieberman's defection is a blow to Olmert's coalition government, which Bush is counting on to negotiate with the Palestinians.