She was speaking in Amman after talks with Jordanian King Abdullah II as this week's thorny negotiations continue apace between Israeli Prime Minister Benjamin Netanyahu and Palestinian president Mahmud Abbas.

"They are serious about this effort. They are committed. They have begun to grapple with the hard but necessary questions," Clinton said of the two.

"With the commitment of an Israeli prime minister and a Palestinian president who both embrace the goal of a two-state solution, peace is once again within reach."

Speaking at a news conference with Jordanian counterpart Nasser Judeh, she said Netanyahu and Abbas "can make the difficult decisions necessary to resolve all the... issues within one year."

She added that she is "convinced that this is the time and these are the leaders who can achieve the results we all seek, two states, two peoples living in peace and security."

Clinton met Abbas earlier in Ramallah, and he publicly pledged his support for the US-backed peace talks despite continuing difficulties over the question of Jewish settlements in the occupied West Bank.

Abbas said "conditions are difficult" but that "there is no choice but negotiations."

Abbas spokesman Nabil Abu Rudeina said the talks were "in-depth and serious" and that the discussions would continue on the sidelines of next week's UN General Assembly meeting.

But a senior Palestinian official said the "gap remains wide" on the settlements dispute despite Clinton's intervention during two days of talks in Egypt and Jerusalem.

The discussions "were difficult and made no progress," he said of a trilateral meeting in Jerusalem on Wednesday.

At that meeting Abbas again threatened to quit the peace talks if Israel did not renew a moratorium on the construction of new homes in West Bank settlements that expires at the end of the month, a senior aide said.

Netanyahu has so far refused to extend the partial ban despite the urging of US President Barack Obama, though he has hinted he would confine building to major settlement blocs.

The Palestinians want to focus on reaching a deal on final borders as a way of resolving the settlements dispute, and US mediators have suggested a three-month extension of the moratorium to allow for such a deal, the Palestinian official said on Thursday.

Some 500,000 Israelis live in more than 120 Jewish settlements across the West Bank and east Jerusalem, territories expected to form the bulk of a future Palestinian state.

US envoy George Mitchell said late on Wednesday that talks this week had made "progress" on the settlements issue.

He also said the two leaders again tackled the issues at the heart of their decades-old conflict -- Israel's security, the borders of a future Palestinian state, the fate of Palestinian refugees and the status of Jerusalem.

"The two leaders are not leaving the tough issues to the end of the process," Mitchell told reporters.

"We take this as a strong indicator that peace is possible and of their desire to conclude an agreement."

Mitchell met Syrian President Bashar al-Assad in Damascus on Thursday, and spoke of Washington's desire for an "agreement between Israel and the Palestinians, between Israel and Syria and between Israel and Lebanon and the full normalisation of relations between Israel and its neighbours."

Syria's SANA news agency quoted Assad as telling him: "Peace cannot last unless it restores full rights to their owners in accordance with international resolutions."

In Cairo, Arab League chief Amr Mussa told Arab foreign ministers: "Given that the essence of Israeli policies remains unchanged, and despite the doubts of some about the goals of these negotiations, we take the sage position of giving it a chance."

And Egyptian President Hosni Mubarak said peace could be achieved in half a year if Israel extended the settlement moratorium.

"What are three or for months, for the sake of the continuation of the peace talks and for the sake of reaching an agreement in three or six months," Mubarak said in an Israeli television interview due to air on Saturday, extracts of which were carried by state news agency MENA.

He called on Netanyahu to take the "difficult decision" of freezing settlement construction, MENA said.

In Brussels, EU foreign ministers issued a statement urging Israel to extend the moratorium.

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