US President George W Bush and UK Prime Minister Tony Blair have said "a new opportunity" has emerged to forge a lasting peace in the Middle East.
Both men spoke of a new chance for Middle East peace
Hours after Yasser Arafat was buried in Ramallah, Mr Bush said the setting up of an independent Palestinian state was possible within the next four years.
Mr Blair said the first priority was to make sure Palestinian elections took place to choose Mr Arafat's successor.
Mr Blair is the first foreign leader to meet Mr Bush since he won re-election.
In a joint news conference at the White House, Mr Blair said the Palestinian election offered a chance "to put the first marker down".
The Palestinian Authority, which governs much of Gaza and parts of the West Bank, plans to hold elections within 60 days.
"If we want a viable Palestinian state, we want to make sure the political, the economic and the security infrastructure of that state is shaped and comes into being," Mr Blair said.
'Great chance for peace'
Mr Bush offered his condolences to Palestinians mourning the death of their leader, but was quick to point out that a new leadership offered a new hope for peace.
He reaffirmed his view that the future of the Middle East is "two democratic states, Israel and Palestine, living side by side in peace and security".
But he said it was up to the Palestinians to show their commitment to peace, to work towards democratic reforms and to fight terror.
"If you want to be helped, here's what we're willing to do," the president said. "If you choose not to be helped, there's nothing we can do."
After the two leaders spoke, US state department officials said the US was looking at a new round of diplomacy, including a possible visit to the Middle East by Secretary of State Colin Powell.
But the BBC's Justin Webb, in Washington, notes that President Bush said nothing that he cannot later walk away from. Despite sounding optimistic, the president remains neither hostile nor committed to a peace process.
The president did not commit himself to an international peace conference on the issue and failed to embrace calls to appoint a special envoy to the Middle East.
He did not give a timetable for achieving a Palestinian state.
But he said he intended "to use the next four years to spend the [political] capital of the United States on such a state".
Democracy the key
Mr Bush also hailed recent elections in Afghanistan as "a standing rebuke to cynicism and extremism".
And both leaders said the US-led military operations in Iraq were aimed at making sure that elections could take place as planned in January.
"We have to complete our mission in Iraq - make sure that Iraq is a stable and a democratic country," Mr Blair said.
The prime minister said he had "little doubt" that the US-led coalition would overcome opponents he described as "terrorists and insurgents, [and] supporters of Saddam Hussein".
"As those elections draw near, the desperation of the killers will grow and the violence could escalate," Mr Bush added.
"Success of democracy in Iraq will be a crushing blow to the forces of terror and the
terrorists know it."
President Bush said he planned to visit Europe "as soon as possible" after his inauguration in January, repeating his message that he planned to reach out to European allies.
"We are the pillars of the free world. We face the same threats and share the same belief in freedom and the rights of every individual," he said.
Mr Blair spoke of a "tremendous desire and willingness" among European nations to ensure the transatlantic alliance, strained over the Iraq war, regains its strength.