Washington  - US President George W Bush said there has been a "good deal" of progress in the Israeli-Palestinian peace process despite the failed effort to reach a settlement before he leaves office.

"No question this is a hard challenge," Bush said during a meeting Friday with Palestinian President Mahmoud Abbas. "But, nevertheless, people must recognize that we have made a good deal of progress."

Abbas and Israeli Prime Minister Ehud Olmert agreed during a conference hosted by Bush in Annapolis, Maryland, in November 2007 to a goal of completing a peace plan by the end of this year.

The process got off to a bumpy start over clashes between the Israeli military and Hamas militants in the Gaza Strip and plans for continued Israeli settlement in disputed areas. The process hit a major snag this summer when Olmert was indicted on corruption-related charges, putting Israel in political limbo.

The White House acknowledged weeks ago that the Annapolis timeframe was no longer achievable.

Bush credited Abbas with improvement in security in the West Bank. He became the first US president to call for the creation of a Palestinian state as the centrepiece of a peace plan.

"This policy has became a reality in every corner around the world," Abbas said through a translator.

Israeli Foreign Minister Tzipi Livni has been tapped to succeed Olmert as head of the Kadima party, but new elections were scheduled for February after she was unable to form a ruling coalition. Olmert will stay in the job until the elections.

Bush, who leaves office on January 20, met with Olmert in Washington in November. d(pa)