This long-awaited speech marks the start of a major new effort by the United States to calm the situation between Israel and the Palestinians.

It also bore all the hallmarks of a tough battle behind the scenes in Washington.

By all accounts, Colin Powell would have liked to deliver a different speech, with more dramatic ideas to push the peace process forward.

The White House, sensitive to domestic pressure from the Jewish lobby, watered it down.

The compromise speech

The compromise was a speech that sounded sympathetic to the Palestinians, but actually delivered little that was objectionable to the Israelis.

On the face of it, Mr Powell was careful to balance his remarks.

He started with a strong call to the Palestinian leadership to make a 100% effort to end the violence.

Palestinians must be "held to account" he said when they did not live up to agreements they had made.

Rare criticism

But Mr Powell went on to criticise the Israeli occupation of the West Bank and Gaza in language rarely heard from an American administration.

Too many innocent Palestinians, including children, had been killed and wounded, he said.

This must stop, he added, and he went on explicitly to condemn the Israeli settlement policy:

"Israeli settlement activity has severely undermined Palestinian trust (and hope). It pre-empts and pre-judges the outcome of negotiations and in doing so cripples chances for real peace and security. The United States has long opposed settlement activity ..."

New peace efforts

The next step will be for two US envoys to be sent to the region. One of them is retired Marine Corps general, Anthony Zinni, whose mission will be to try to help implement a ceasefire.

General Zinni will work with committees being set up by the Israelis and Palestinians.

Their mandate covers both security and politics so this could be a subtle way of circumventing the Israeli demand for seven days of quiet before re-starting political talks.

But several previous attempts by the Americans to broker security cooperation have failed.

Mr Powell said the United States was also ready to send monitors if that was acceptable to both sides.

Message to Muslims

Behind the scenes, the Israelis will need some heavy persuasion to accept their deployment.

The Americans will be hoping the message of reassurance sent to both sides by this speech will help them stop fighting and resume talking.

There's an important signal here as well to Muslim members of the coalition against terror, that the United States is doing its best to end the Israel-Palestinian conflict.

Many commentators will draw a more sanguine conclusion. President Bush is not prepared yet to take the political risks necessary to afford a realistic chance of progress in the Middle East.