WASHINGTON - President Bush and Israeli Prime Minister Ariel Sharon disagreed yesterday on how to move forward in ending the Israeli-Palestinian conflict, with Bush remaining convinced that the Middle East peace process must proceed in tandem with efforts to prevent violence and terror against Israelis.

Meeting with Bush in the Oval Office and over lunch, Sharon sought to convince the president that negotiations must be delayed until all violence against Israelis ceases and Yasser Arafat has been sidelined or replaced as the leader of the Palestinians.

Bush, speaking midway through the session, said: "I reiterated my strong view that we need to work toward two states living side by side in peace."

White House spokesman Ari Fleischer said the president continues to believe "that you have to have progress on both the political front and the security front, and the two go hand in hand. And that's what the president discussed directly with the prime minister."

Sharon was the last Middle East leader that Bush is likely to see before fashioning a plan to halt 21 months of Israeli-Palestinian bloodshed and fulfill his vision for the region, in which the Jewish state coexists peacefully with a state called Palestine. Bush has met previously with Sharon and with the leaders of Egypt, Jordan, Saudi Arabia and Morocco.

A difficult path

The president's disagreement with the hard-line Israeli leader underscores the difficulty Bush faces in his bid to come up with what he has called a "feasible" peace plan and a time frame for implementing it. The leaders' differences also suggest that future pressure on Israel may be required if Bush wants to bridge the competing demands of Israelis, Palestinians and the Arab states.

Fleischer said Bush "wants to do a little thinking" and talk to advisers before making his move, and cautioned against expecting "anything immediate." But an aide said later that the president could announce his strategy this month, perhaps as early as next week.

Heightened tension

The meeting with Sharon came amid heightened tension in the region after an overnight Israeli incursion into the West Bank town of Ramallah, where Israeli tanks again surrounded Arafat's headquarters.

Israeli officials said the raid was conducted to arrest terrorists, and Bush indicated that he was satisfied with the explanation.

"There are people in the Middle East who want to use terror as a way to derail any peace process," Bush said. "Israel has a right to defend herself."

But Fleischer noted that "the United States will be closely monitoring what Israel is doing." The White House spokesman said the United States "again reminds Israel about the importance of remembering [that] the repercussions of whatever action Israel takes today impact the broader goals of achieving peace tomorrow."

A stronger U.S. role

Bush's determination to launch a renewed peace process marks a major evolution in his thinking from a year ago, when the United States and Israel were in agreement that a halt to violence must come before Middle East negotiations could resume. Sharon argues that agreeing to negotiations while violence continues would simply reward terrorists.

In recent months, however, Bush has been persuaded by Arab leaders and some of his own advisers that a strong American mediating role is essential to bringing an end to the fighting. Arab leaders say the violence will continue unless Palestinians can expect the creation of their own state and an Israeli withdrawal from occupied territory.

Disdain for Arafat

Bush indicated that he shares Sharon's contempt for Arafat's leadership, saying that the "conditions aren't there yet" for an international conference this summer to launch peace talks.

"That's because no one has confidence in the emerging Palestinian government," Bush said.

In using the word "emerging," Fleischer said, the president was referring to his well-known disappointment with Arafat, not the new government that is starting to take shape.

Secretary of State Colin L. Powell wants to hold the peace conference in July, though some likely participants, such as Egypt, want it held later.

Bush administration officials put heavy emphasis on reform of Palestinian institutions as a way of building confidence among Israelis and Palestinians. U.S. officials hope that a more open, democratic and professional Palestinian government will persuade Israelis that a future Palestinian state would not threaten Israel's existence, while offering the prospect of a better life to the Palestinian people.

Israeli officials have dismissed the reforms announced so far, including a streamlined Palestinian security structure and a smaller Cabinet that includes a few members who are not identified closely with Arafat.

Sharon insisted during his meeting with Bush yesterday that conditions are far from ripe for new negotiations.

"In order to achieve peace in the Middle East, first of all we have to have security," the prime minister said. "It should be a full cessation of terror hostilities and incitement.

"And, of course, we must have a partner for negotiations. At the present time, we don't see yet a partner," said Sharon, who wants to see Arafat stripped of all but a symbolic leadership role.

U.S. officials are less pessimistic about the Palestinian reforms. Fleischer said Arab leaders had cooperated in pushing Arafat to make changes. CIA Director George J. Tenet and Assistant Secretary of State William Burns, who have recently returned from the Middle East, "gave the president reason to have hope that the process can move forward," Fleischer said.

The White House hopes the reforms will enable new leaders to emerge, possibly through democratic elections, though officials avoid saying what should happen to Arafat.

Repeating criticism of Arafat's failures, Fleischer said: "The president does have hopes, though, that the Palestinian people will have the leadership necessary to have a state."

Administration officials still harbor suspicions that no amount of reform will suppress terrorist impulses that may be spread broadly through the Palestinian leadership.

"It's not clear where the problem resides. Is it Arafat or is it a larger structure?" one official said. If, despite structural reforms, "the situation doesn't change," the Bush administration may have to shift course, he said.

In an op-ed article in Sunday's New York Times, Sharon said that when peace talks resume, the aim should be to achieve no more than a long-term "interim" agreement with the Palestinians that would leave unresolved the toughest issues between the two sides: final borders, the status of Jerusalem and the fate of Palestinian refugees. He ruled out a return to the borders that Israel held before the 1967 Arab-Israeli war or a division of Jerusalem.

Bush, however, has decided to propose a strategy for how these tough issues should be tackled in negotiations.

As for difficulty in bridging the gulf between Arabs and Israel, Fleischer cited the sharp disagreement over boundaries, with Sharon refusing to return to the 1967 lines and Egyptian President Hosni Mubarak, who met with Bush on Friday and Saturday, insisting that these lines define the new border between Israel and Palestine.

Sharon, in the Times article, wrote that Israel can't reach a peace settlement with the Palestinians "in isolation," but needs "peace with the entire Arab world."