Palestinian Prime Minister Salam Fayyad said on Thursday a lasting peace accord with Israel was unlikely in 2008 despite renewed diplomatic efforts to resolve the long-running conflict.

In an interview with Reuters in the Texas capital, Austin, where he is on a private visit, he highlighted the lack of progress on the issue of Israeli settlements and military incursions into the West Bank as among the chief obstacles in the "road map" to peace and Palestinian statehood.

"I do not believe though that the final resolution ... will be complete in the course of this year. I don't think that is likely," Fayyad said.

On a trip to the Middle East last month, U.S. President George W. Bush said he believed a peace treaty between Israel and the Palestinians would be signed before he leaves office in January 2009.

The U.S. government will assess and judge whether Israel and the Palestinians are meeting their obligations under the 2003 road map as part of a push for a Palestinian statehood agreement before Bush leaves office.

In the interview, Fayyad said: "The short-term track is not moving as well as it needs to for the political process, for negotiations. In particular, the lack of an adequately firm commitment with regard to (Israeli) settlements," he said.

Israel has yet to fulfill its road map commitments to halt Jewish settlement activity and to uproot outposts built without government permission in the occupied West Bank.

Israeli officials have said Palestinians have a long way to go to meet their security obligations under the road map.

Fayyad repeated his government's criticism of Israeli military incursions into West Bank towns like Nablus in pursuit of Palestinian militants, saying such actions undermined its own efforts to impose law and order.

"Our efforts are undermined, our credibility is undermined particularly in areas where we have made progress," he said.

Palestinian forces last year began executing a plan devised by Fayyad's Western-backed government to crack down on armed militias.

Israel fears any West Bank areas it hands over to the Palestinians could, like the Hamas-controlled Gaza Strip, be used by militants as launching points for rocket attacks on Israeli towns.

International Middle East envoy Tony Blair said on Thursday that Palestinian security forces had significantly improved and were starting to carry out their part in a long-stalled road map peace plan.

Fayyad said militias linked to the militant Palestinian group Hamas and others were also not helping matters for his embattled government.

Asked if his government wanted them to disarm, he said: "Yes, of course. All militias. Hamas and everyone else.