The Saudi monarch has made a forceful appeal for Arab unity, denouncing US policy in Iraq and the embargo imposed by western nations on the Palestinians.
King Abdullah said blame lay with Arab leaders themselves
At the Arab League summit in Riyadh, King Abdullah described the US presence in Iraq as an illegitimate occupation.
Correspondents say he is seeking to show a measure of independence from Saudi Arabia's ally, the United States.
Arab leaders are meeting to relaunch a plan for peace with Israel that they first endorsed five years ago.
SAUDI MIDDLE EAST PLAN
Also known as Beirut Declaration
Adopted by Arab League in 2002
Calls for "full Israeli withdrawal from all the Arab territories occupied since June 1967"
Calls for Israel's "acceptance of an independent Palestinian State, with East Jerusalem as its capital"
All Arab states would establish "normal relations... with Israel" and "consider the Arab-Israeli conflict ended"
Calls for a "just solution to the Palestinian refugee problem"
The plan offers Israel normal relations with Arab states if it withdraws from land occupied in 1967, and accepts a Palestinian state.
Arab hard-liners have accused Riyadh of being ready to water down the "land for peace" deal to gain Israeli acceptance.
Israel's western allies have withheld recognition from a new Palestinian unity government, including members of the Islamist group Hamas which they consider a terrorist organisation.
The Saudi monarch insisted said the "real blame" for Arab woes lay with squabbling Arab rulers, who could only prevent "foreign powers from drawing the region's future" if they united.
"In beloved Iraq, blood is flowing between brothers, in the shadow of an illegitimate foreign occupation, and abhorrent sectarianism threatens a civil war," said the king.
"In wounded Palestine, the mighty people suffer from oppression and occupation," he said.
Summits are often platforms for Arab discord not Arab unity
"It has become vital that the oppressive blockade imposed on the Palestinians end as soon as possible so the peace process will get to move in an atmosphere without oppression."
"Our constant disagreements and rejection of unity have made the Arab nation lose confidence in our sincerity and lose hope."
A US official has insisted King Abdullah was wrong to criticise the US military presence in Iraq.
"The United States is in Iraq at the request of the Iraqis and under a United Nations mandate. Any suggestion to the contrary is wrong," said National Security Council spokesman Gordon Johndroe.
Separately, Israel's Deputy Prime Minister Shimon Peres said it refused to accept the revived Arab peace plan as it stood and further discussions were needed.
"There is only one way to overcome our differences, and that is negotiation," Mr Peres told Israeli public radio. "It's impossible to say: you must take what we offer you as is."
Under the plan, Arab nations would recognise Israel if Israel withdrew from land occupied in the 1967 war, accepted a Palestinian state, and agreed a "just solution to the Palestinian refugee problem".
Israel rejected the 2002 plan outright after it was first proposed at an Arab summit in Beirut, but Israeli Prime Minister Ehud Olmert is now giving it a guarded welcome, albeit with reservations linked to the issue of refugees.
There are more than four million Palestinian refugees registered with the UN, most of them descendants of people living in British-administered Palestine, before Israel was created in 1948.
Israel opposes allowing them to exercise any right to return to their original homes or land, because it could erase its current Jewish majority.