US Secretary of State Condoleezza Rice has said the United States will try to broker a peace deal between Israel and the Palestinians over the next year.
Ms Rice said the talks at Annapolis represented a "big step forward"
Ms Rice said both sides had agreed to work towards the establishment of an independent Palestinian state before US President George W Bush leaves office.
She also said Washington hoped such negotiations would be launched at next week's peace conference in Annapolis.
Invitations have been issued to Israel, the Palestinians and key Arab states.
President Bush will have separate talks with both the Israeli and Palestinian leaders at the White House before the conference begins on Tuesday.
'Launch of negotiations'
Speaking to reporters in Washington ahead of the peace conference, Ms Rice said the US would attempt to broker a permanent settlement between Israel and the Palestinians before Mr Bush leaves office.
"We all know how long that is - it's about a year," she said. "That's what we will try to do."
Israeli Prime Minister Ehud Olmert said on Tuesday that he hoped a definitive peace deal could be reached next year.
Ms Rice said the talks at the US naval academy in Maryland represented a "very big step forward".
"The success of this meeting is really in the launch of negotiations between the Israelis and the Palestinians for the establishment of a Palestinian state and therefore a two-state solution," she added.
"I do not think that several months ago, maybe even several weeks ago, it would have been predictable that we would be at this point."
Ms Rice said past negotiations had been hindered by a condition that the first phase of the "road map" drawn up by the Middle East Quartet in 2003 had to be completely implemented before talks could begin on the creation of a Palestinian state.
"As Prime Minister Olmert said to the Knesset last week, Israel has changed its traditional view," she added.
The US-backed peace conference in Annapolis will be the first fully-fledged Middle East peace talks since 2000, when former US President Bill Clinton hosted a meeting between Israeli and Palestinian leaders at Camp David.
Key Arab states have been reticent about attending the peace talks
However, key Arab states have been reticent about committing to sending high-level representatives to attend.
Saudi Arabian officials have said they are not convinced that either the US or the Israelis have done enough to make the conference a success.
The Syrian government has meanwhile said it will only attend if the issue of the Golan Heights, which was occupied by Israel in 1967, is on the agenda.
The BBC's Roger Hardy says that, in both cases, the solution may lie in a collective Arab decision.
Arab League foreign ministers are due to meet in Cairo on Friday to co-ordinate their positions.
The signs are that, despite deep misgivings, they will decide it is better to take part than risk the odium of staying away, our correspondent says.