US President George W Bush has called Israel's West Bank security fence "a problem" in a joint appearance with Palestinian Prime Minister Mahmoud Abbas.
The meeting between the two leaders was described as "fruitful"
He also said the US would take new measures to improve the Palestinian economy, setting up a new joint US-Palestinian economic group.
The BBC's Gordon Corera in Washington says the mere presence of the Palestinian prime minister in the White House is significant.
It marks the first time a Palestinian leader has been given the red carpet treatment by the Bush administration - which has shunned Palestinian Authority President Yasser Arafat.
Speaking about the Israeli security fence, Mr Bush said: "It is very difficult to develop confidence between the Palestinians and Israelis with a wall snaking through the West Bank.
"I've discussed that with [Israeli Prime Minister] Ariel Sharon. I will continue to discuss this issue very clearly with the prime minister," he said.
Israel has been under pressure to introduce confidence-building measures in connection with the US-backed peace plan known as the roadmap.
As Mr Bush was meeting Abu Mazen, the Israeli Government announced it was lifting three roadblocks in the West Bank.
The checkpoints are to be removed between Ramallah and Jerusalem, Ramallah and Nablus, and
Bethlehem and Hebron.
Mr Sharon also said Israel would transfer two more West bank cities to Palestinian control - adding that the decision on the cities to be handed over would be taken next week.
Abu Mazen is on his first visit to Washington
So far, Israeli troops have pulled out of Gaza and the West Bank town of Bethlehem.
Mr Sharon also gave a commitment to look at further releases of Palestinian prisoners.
Mr Bush's comment on the prisoner issue was not as critical of Israel as his remarks on the West Bank fence.
The US president said the release of any prisoners would be on a "case by case" basis.
No "cold-blooded killers" would be released if there was any hint of derailing the peace process, he said.
The president said he and Mr Abbas shared a "common goal" of finding peace in the Middle East.
For his part, Abu Mazen called the meeting "fruitful" and said his authority appreciated the "relentless efforts" made by the Bush administration in pursuit of peace.
"Security for all is an essential element in progress," he said.
And he accused Israel of hindering the process - calling for a freeze on settlements and the removal of the wall.
The Palestinian prime minister had earlier held talks with senior members of the United States Congress, at the start of his first visit to Washington since he came to office.
Abu Mazen took office in June - after Washington refused to deal with Palestinian leader Yasser Arafat.