President Bush’s peace mission to the Middle East is in trouble even before the US leader sets off for Jerusalem today on his maiden visit to the Holy Land.

Violence has broken out between Israel and Islamic militants on two fronts, peace talks between Israelis and Palestinians have faltered and there are real fears that the situation in the region could deteriorate sharply.

Speaking as Mr Bush prepared to leave on his three-day trip to Israel and the West Bank, Ron Prosor, the new Israeli Ambassador to London, predicted that 2008 would be decisive, but that it was not clear who would emerge victorious, moderates or militants. “I see the year 2008 as a crossroads: it is either [Palestinian President Mahmoud] Abbas or Hamas [the militant group],” he told The Times.

The envoy gave warning that his country’s patience was running out after 138 rocket attacks this year, including one missile fired from Gaza last week that hit the Israeli city of Ashkelon ten miles away. Two Katyusha rockets were also fired into northern Israel from Lebanon early on Tuesday in what was seen as a clear signal to the American President.

Mr Prosor’s remarks cast fresh doubts on Washington’s hopes of a breakthrough in the peace process in the Administration’s final months in office. After a conference in Annapolis six weeks ago, Israel and the Palestinians were supposed to begin talks on final status issues. The Bush Administration is aiming for the creation of a Palestinian state by the end of this year.

But so far no progress has been made and Mr Bush will be hard-pressed to find any encouraging signs that his initiative is working, when Air Force Once touches down in Israel tomorrow.

Mr Prosor, a career diplomat who has previously served in London, said that Israel was very concerned about the safety of its citizens. He added that Western democracies had no idea of the pressure that Israel was under from Palestinian attacks, where on average last year one rocket or mortar was fired every three hours.

“A Grad missile - a large missile of Iranian origin - was fired last week at Ashkelon. No government in the world would allow this to happen,” he said. “If this continues then Israel, like any other government, will be compelled to act on a large scale.”

The Israeli envoy dismissed calls for his government to enter into negotiations with Hamas, which effectively runs a separate government in the Gaza Strip. “What do you suggest that we talk about? Arranging for my funeral? How big the hole for my coffin should be? What flowers to arrange? They want us dead,” he said.

Mr Prosor said that the realities on the ground in Israel were not being conveyed to the British public and that he intended to make public diplomacy a focus of his posting to London.

The two previous Israeli ambassadors, both political appointments, were criticised by British Jewish leaders for not defending Israel adequately in the media and public and not speaking good enough English.

Mr Prosor said that Britain was playing a crucial role in helping to bolster moderate Palestinians through the efforts of Tony Blair, who now co-ordinates Middle East peace efforts for the Quartet group of nations, Gordon Brown and David Miliband, the Foreign Secretary, who said that Britain was launching a “diplomatic surge” in the Middle East in 2008.

Mr Prosor said that Iran remained the biggest challenge to the stability of the region, but that for now Israel was prepared to allow diplomacy to take its course, even though Tehran had repeatedly called for his country to be wiped out.

“Iran is a global threat and hence there should be a global response to Iran,” the Israeli envoy said. “We still believe in diplomatic avenues and snactions."