President George Bush yesterday tried to reassure sceptical Arab leaders that by the end of the year he wanted a Palestinian state "defined", after being criticised for missing an opportunity to highlight the matter when he lavished praise on Israel last week.

Speaking before Mr Bush met the President of Palestine, Mahmoud Abbas, in Sharm el-Sheikh, a leading Palestinian negotiator and moderate, Saeb Erekat, said: "He should have told the Israelis no one can be free at the expense of others. He missed this opportunity and we are disappointed."

The US President, fresh from a trip to Saudi Arabia in which he failed to persuade King Abdullah to raise oil production by more than a token 300,000 barrels a day to ease US petrol prices, insisted that "we'll work hard" to secure an outline agreement on a future Palestinian state by the end of his presidency.

The President's Knesset speech on Thursday made no mention of the current negotiations between the teams of Mr Abbas and the Israeli Prime Minister, Ehud Olmert, on a putative "shelf agreement" on a two-state solution – to be implemented when Israel is satisfied that it will guarantee its security. Mr Bush acknowledged that, at his first meeting in Sharm el-Sheikh, President Hosni Mubarak of Egypt had "wanted to make sure that my approach toward the Middle Eastern peace is firm, and that we work hard to get the Palestinian state defined".

Mr Bush's speech made no mention of the occupation of Palestinian territory or of the continued expansion of Jewish settlements in the West Bank, officially opposed by the US. It was ecstatically received by Israeli parliamentarians on the far right.

Zevulun Orlev, leader of the National Religious Party, which spearheads the settlement movement, declared: "His unconditional support for Israel is moving."