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WASHINGTON (AP) _ Lasting peace in the Middle East is possible only if a Palestinian state is established, President Bush said Tuesday as he reached out to the Arab world.

Underscoring his message, Bush said, ``our government means what we say.''

Taking a break in talks with King Mohammed VI of Morocco for a picture-taking session, Bush also urged Israeli Prime Minister Ariel Sharon to speed up the withdrawal of Israeli troops from the West Bank and pressed Palestinian leader Yasser Arafat to confront terrorism.

``The only way for there to be lasting peace is for there to be two states living side by side at peace with each other,'' Bush said.

On Thursday, Bush will receive Crown Prince Abdullah of Saudi Arabia, whose proposal for a settlement between Israel and the Arabs already has been embraced by the president.

It would have Israel turn over the land the Arabs lost in the 1967 Mideast war in exchange for pledges of peace and recognition.

Bush said Arafat must combat terror and Sharon must step up the withdrawal of Israeli troops from the West Bank where their hunt for terror suspects and illicit ammunition has angered European and Arab governments.

Sharon has tarried, giving Israeli forces more time. Late Monday, an Israeli helicopter attacked a car carrying Marwan Zalloum, the commander of the Al Aqsa Martyrs' Brigade militia, killing Zalloum and his bodyguard.

The Israeli military said Zalloum was responsible for dozens of attacks, including an April 12 suicide bombing in Jerusalem that killed four Israelis and two Chinese workers, as well as a shooting attack on a Jewish settlers' enclave in Hebron in which a baby girl was killed last year.

Sharon said Tuesday Israel's campaign against terror on the West Bank opens the door to peacemaking with the Palestinians.

Renewing his call for an international peace conference, which Bush is considering, Sharon said Israel would pursue peace with the Palestinians in stages.

Bush said a peace conference was only one of several options he was exploring. The key, he said during talks with the Moroccan king, is for government leaders to work toward the vision of peace with two states, Israeli and Palestinian.

The king, urging a more vigorous U.S. role, said, ``We have to shift the gear to go into higher speed.'' He also pledged Morocco's support in the U.S.-led campaign against terrorism.

Bush said he would promote a free-trade agreement with Morocco, thereby giving the North African country easier access to U.S. markets.

The king thanked Bush for sending Secretary of State Colin Powell to the Middle East two weeks ago and said, ``We are beginning to see the results,'' an apparent reference to Israel's pulling back some forces.

Sharon, detailing his three-step plan, said that first there must be a complete cessation of violence and incitement to attack Israel. Then, he said, Israel would be prepared for a long-term armistice with the Palestinians. In a third stage, Israel and the Palestinians would reach a final settlement.

He said borders would be drawn, implying his approval of a Palestinian state.

``Regional peace is within our grasp,'' Sharon said via television to the annual convention of the American Israel Public Affairs Committee, a lobbying group. ``I am optimistic about the future.''

Israel's incursion into Palestinian areas ``has opened a window of opportunity to put the peace process back on a different moralistic track, free from the threat of terrorism,'' Sharon said.

The issue of an international conference was raised during Powell's trip to the region. Powell said such a meeting could restore hope, but the White House has not registered enthusiasm.

Such a conference ``can foster a coalition of countries committed to peace and able to defeat the forces of terrorism and evil circling our lives,'' Sharon said.

Israel received a bipartisan boost, meanwhile, from Rep. Robert Menendez, D-N.J., and Rep. Tom DeLay, R-Texas, the House majority whip.

Israel's military incursion ``was defensive in nature, no less than the United States' activities in Afghanistan,'' Menendez said.

DeLay called the Palestinian Authority ``a holding company for terrorist subsidiaries'' and, bringing the audience to its feet, said ``democracies must never negotiate with terrorists.''

Powell telephoned Israeli Defense Minister Binyamin Ben-Eliezer as Israeli forces pressed their campaign against terror suspects even while withdrawing from most of the West Bank.