CAMP DAVID - President Bush resisted yesterday an Egyptian demand that he set a timetable for an Israeli-Palestinian agreement, stressing that his first priority is to reform Palestinian institutions in a way that would prevent terrorism and give Israelis enough confidence to make peace.

Bush, after serving as host to Egyptian President Hosni Mubarak, an important Middle East ally, said successful reforms would allow new leaders to emerge among the Palestinians that would benefit them and pave the way for an independent state "at peace with its neighbor."

The meetings Friday night and yesterday morning at the presidential retreat were part of a final set of consultations before Bush announces a strategy to move Israelis and Palestinians away from the bitter conflict and toward a settlement based on coexistence between Israel and a state called Palestine.

Bush will meet tomorrow with Israeli Prime Minister Ariel Sharon, after which he has said he will be ready to announce "how I think we should move forward."

The president was clearly reluctant to disclose details of his strategy before giving a fair hearing to Sharon.

But his brief joint news conference with Mubarak yesterday showed obvious differences with the Egyptian president over the pace of negotiations, the role of Yasser Arafat and how to end Israeli-Palestinian violence that has claimed more than 1,800 lives over the past 21 months.

Mubarak came here to press Bush to set a timetable for peace talks that would bring a peace agreement and a withdrawal by Israel from occupied territory as soon as two years from now. He has suggested that a Palestinian state be recognized before major agreements are reached between Israel and the Palestinians. Arabs fear that without a timetable for deadlines, Israel will find reasons to delay turning land over to the Palestinians.

To restore Palestinian confidence in the peace process, Mubarak demanded in a statement yesterday that Israel end its siege of Palestinian towns and villages and pull back its forces to the positions they held in September 2000, before the start of the Palestinian uprising. He also sought a halt to "assassinations" of leading Palestinian militants and an end to settlement, building and land seizures.

"It is time to implement our common vision in an effective and systematic way," he said in the statement.

Asked about a deadline, Bush said, "We need to start immediately in building the institutions necessary for the emergence of a Palestinian state."

He agreed with Mubarak that Palestinian reforms needed to be accompanied by "dialogue" between Israelis and Palestinians, but added, "We're not ready to lay down a specific calendar, except for the fact we need to get started quickly, soon, so that we can seize the moment."

The idea of a firm timetable and deadline has drawn strong opposition from Sharon. The prime minister insists that any progress toward peace be tied to an end to Palestinian violence and refuses to negotiate until Arafat is sidelined.

The main pro-Israel lobbying group in Washington, the American-Israel Public Affairs Committee, also opposes a timetable, which would likely require Bush to put growing pressure on Israel to halt settlement expansion and begin withdrawing from occupied territories.

On Arafat, Mubarak said, "Look, we should give this man a chance" to show he can reform the Palestinian Authority.

"If he's going to deliver, I think everybody will support him. If he's not going to deliver, his people will tell him that," Mubarak said.

Bush, by contrast, described the Palestinian leader almost as an obstacle that needed to be circumvented, saying, "Chairman Arafat, as far as I'm concerned, is not the issue. The issue is whether or not the Palestinian people can have a hopeful future.

"I also happen to believe that there is plenty of talent amongst the Palestinians, and that if we develop the institutions necessary for the development of a state, that talent will emerge."

Bush demanded that Arafat do "everything in his power to stop violence. I mean everything," starting with a restructuring of the Palestinian security force.

But Mubarak said, "I don't think the violence will come to an end unless the people feel there is hope for peace and there is something to show that peace is coming. If they didn't feel that, they will not stop violence. It will continue forever."

Bush avoided any direct criticism of Israel. When an Egyptian journalist asked his view on Israel's continued expansion of settlements, Bush suggested that she review his April 4 speech, in which he said, "Israeli settlement activity in occupied territories must stop."