WASHINGTON, July 25 — President Bush received the new Palestinian prime minister at the White House today for the first time, and he used the occasion to signal to both Palestinians and Israelis that he would push them toward tough decisions for peace.

After meeting in the Oval Office with the prime minister, Mahmoud Abbas, Mr. Bush said that they had held forthright discussions about the most sensitive issues between the sides and that the issues would be discussed again when the Israeli prime minister, Ariel Sharon, visited the White House on Tuesday.

The president suggested that he was supportive of the Palestinians on one topic raised by Mr. Abbas: Israel´s construction of a security fence that is cutting into Palestinian areas on the West Bank. But he said the onus was on Mr. Abbas to clamp down on terrorist activities by Palestinian groups, and he rebuffed calls by Palestinians for Israel to release as many as 6,000 prisoners it is holding, many accused by Israel of taking part in terrorist activities.

Mr. Bush noted that the United States had recently provided a $20 million grant to the Palestinian Authority for economic development in the occupied territories, and he announced that he would send Treasury Secretary John W. Snow and Commerce Secretary Donald L. Evans to the region this fall to develop specific plans to create jobs and attract investment.

"This is the time of possibility in the Middle East," Mr. Bush told reporters in the Rose Garden, with Mr. Abbas at his side. "And the people of the region are counting on the leaders to seize opportunities for peace and progress."

Having concluded that the Palestinian leader, Yasir Arafat, is not serious about coming to a peaceful solution in the Middle East, Mr. Bush has promoted Mr. Abbas as a reformer with the courage to lead his people toward an independent state and coexistence with Israel. But after nearly three months in office, Mr. Abbas is still solidifying his position and dealing with deep strains within the Palestinian leadership over how far to go in accommodating Israel.

"Some steps have been taken by Israel so far, but these steps remain hesitant," Mr. Abbas said. "The new era of peace requires the courageous logic of peace, not the suspicious logic of conflict."

Mr. Arafat met at least 20 times with Bill Clinton during Mr. Clinton´s two terms as president. Mr. Bush has never met with Mr. Arafat, and the only previous Palestinian official to visit the Bush White House was Mr. Abbas´s finance minister.

For Mr. Bush, today´s meeting continued a deepening involvement in the Middle East and furthered his role as a go-between for Mr. Abbas and Mr. Sharon. The president noted that Mr. Sharon had chosen today to signal a willingness to address more of the demands of the peace proposal, known as the road map, that has been the basis for the most recent effort to end the violence.

Mr. Sharon´s government said today that it would take a number of steps intended to reassure the Palestinians, including withdrawal of troops from two West Bank towns, removal of three roadblocks that have choked traffic and an increase in the number of work permits issued to Palestinians for employment in Israel. Mr. Sharon´s government also said it would "consider ways to reduce as much as possible infringements by the security fence on the Palestinian population´s daily lives."

Answering questions from reporters after the White House meeting today, Mr. Bush offered some support to both sides but also made clear that he would press them to make painful compromises. Asked about Israel´s construction of the security fence, Mr. Bush replied, "I think the wall is a problem."

Mr. Bush said that he had raised the matter before with Mr. Sharon, and that the Israeli prime minister was willing to discuss it in Washington next week. "It´s very difficult to develop confidence" between the sides, Mr. Bush said, "with a wall snaking through the West Bank."

On the subject of Palestinian demands that Israel release prisoners, Mr. Bush appeared sympathetic to Mr. Sharon, who has agreed to release more than 500 of the 6,000 prisoners but none "with blood on their hands."

Mr. Bush said prisoner release should be considered case by case. "But I would never ask anybody in any society to let a prisoner out who would then commit terrorist actions," he said.

The president also indicated that while he would push Israel to adhere to the requirement of the road map that it dismantle recently built Jewish settlements, he also saw resolution of the broader issue of the settlements as dependent on Mr. Abbas´s ability to curb terrorism.

"I´ve constantly spoken out about the end of settlements," Mr. Bush said, apparently referring to the required dismantling of settlements established since March 2001, when Mr. Sharon took office. "And I´m going to tell you point-blank that we must make sure that any terrorist activity is rooted out, in order for us to be able to deal with these big issues." (Copyright 2003 The New York Times Company 07/26/03)