President Bush declared today that a Middle East peace treaty would be signed before he leaves the White House in January next year - but warned Israel against a "Swiss cheese" solution for the borders of an independent Palestinian state.

“I believe it’s possible - not only possible - I believe it’s going to happen, that there’ll be a signed peace treaty by the time I leave office. That’s what I believe," Mr Bush told a press conference in the West Bank city of Ramallah after meeting Mahmoud Abbas, the Palestinian President.

In a relentlessly upbeat performance clearly designed to challenge the sceptics, Mr Bush added: "I am confident that with proper help the state of Palestine will emerge and I am confident that when it does emerge it will be a major step towards peace."

Thousands of Palestinian and US security personnel imposed a virtual curfew on Ramallah as Mr Bush became the first US President to visit the Muqata compound where the late Palestnian leader Yassir Arafat lived under Israeli siege only a few years ago.

The entire area surrounding the compound was sealed off to pedestrian and vehicle traffic, with numerous checkpoints set up to verify the identification of any passers-by.

Thick fog covered Ramallah and nearby Jerusalem from early morning, grounding plans for Mr Bush to land in Ramallah aboard his Marine One helicopter and forcing him to go by road instead. Taking no chances with the safety of the American leader, authorities issued an order banning locals from climbing on to rooftops to watch his arrival.

Critics say that Mr Bush has failed to deploy Washington’s full weight in seeking to end the 60-year-old conflict during the first seven years of his presidency - and few believe that historic differences can be overcome in the next 12 months as Mr Bush seeks to salvage his repuation in the region.

According to a poll poll published in an Israel today, 77 per cent of its citizens are doubtful that Mr Bush’s visit will advance peace talks.

Standing alongside Mr Bush at today's joint press conference, Mr Abbas said he hoped that this “this will be the year for the creation of peace”.

Mr Abbas urged his visitor to press Israel to ease security restrictions in the occupied West Bank that Palestinians say cripple their society and economy, as well as to halt Jewish settlement. Mr Bush replied: “I can see the frustrations. But I also understand that people in Israel ... want to know whether there’s going to be protection from the violent few who murder.”

But the US President, seen by many Arab observers as too close to the Jewish state, also said that Israel must ensure the future Palestinian state had contiguous territory and was not carved up by Jewish settlements and security blockades.

“The vision of a Palestinian state is one of contiguous territory,” he said. “Swiss cheese isn’t going to work when it comes to the territory of a state.”

The elephant in the room at today's meeting was the problem of the Gaza Strip, where 1.5 million Palestinians live under the rule of Hamas. Mr Bush that the Islamist group had delivered "nothing but misery" to the Palestinian people.

Mr Hamas swept away Mr Abbas’s long-dominant secular Fatah party in parliamentary polls in January 2005. In June 2007, it routed pro-Fatah forces in the Gaza Strip after a week of deadly factional street clashes.

Mr Bush also urged Israel, which frequently mounts raids against militants in the West Bank, not to take action that undermines Mr Abbas’s security forces, which Washington hopes will be a pillar of a future, democratic state.

Politically weak, Mr Abbas is hoping that the Bush visit will boost his own standing among Palestinians, who are desperate for progress towards an end to Israeli occupation and fulfilment of their dream of an independent state.

Mr Bush held talks with Ehud Olmert, the Israeli Prime Minister, in Jerusalem yesterday, saying that he was“very hopeful” about prospects for peace. But he acknowledged:“I’m under no illusions. This is going to be hard work.”