Washington - The White House acknowledged Thursday that Israeli Prime Minister Ehud Olmert's political troubles could distract from the goal of achieving a peace deal with the Palestinians by the end of the year.

"There's no doubt that it obviously takes up some oxygen when you're trying to deal with intense and complex negotiations with the whole of the Middle East, but especially in the Palestinian territories and Israel," White House spokeswoman Dana Perino said.

President George W Bush has listed a peace deal between the Israelis and Palestinians among his key objectives before he leaves office in January. He has visited the region twice since brokering an agreement between Olmert and Palestinian President Mahmoud Abbas to seek a deal by the end of 2008.

Perino said Bush remains committed to that goal regardless of the fate of Olmert, who has faced increased calls to resign amid an ongoing investigation into his finances.

"The president believes that Israeli politics is something that Israelis are going to have to deal with," Perino said.

"And setting that aside, he believes that the people who are in the government - in the Palestinian territories and the Israelis - now recognize that in order for both to have a state that is democratic and free, that a Palestinian state needs to be defined."

"And that's the goal that we're reaching towards for the end of the year," she said.

Perino said Bush plans to meet with Olmert next week when the prime minister is in Washington.

Meanwhile, the State Department said that Secretary of State Condoleezza Rice plans to visit the Middle East in "the not-too- distant future" in an effort to usher along the peace negotiations that resumed after the Bush-brokered conference in Annapolis, Maryland in November.

"I'm not aware that anything that's occurred in Israeli politics in the last few days has made any change in our plans necessary," deputy spokesman Tom Casey said.

Casey did not provide details about Rice's planned trip to the region.

Olmert has refused to step down, saying he will only do so if he's indicted. Olmert's dilemma took a turn for the worse on Wednesday when his defence minister and the leader of his largest coalition partner, Labour's Ehud Barak, called on Olmert to relinquish power. Olmert heads the Kadima Party.

Barak's statement came after a US businessman, Morris Talansky, testified Tuesday that he provided the prime minister with 150,000 dollars in cash during a 15-year period prior to Olmert's current job. Olmert said the money was for campaign expenses. (dpa)