Preparing the ground for crucial Mideast talks in London next week, U-S Vice President Al Gore held talks on Friday with Israeli Prime Minister Benjamin Netanyahu.
But Netanyahu said the Israelis and the Palestinians remained divided on crucial issues.
The U-S is trying to forge an agreement on the question of further Israeli troop withdrawals from the West Bank.
During his visit, Gore lunched with Netanyahu, met Israeli opposition leader Ehud Barak and laid a wreath at the grave of slain Israeli Prime Minister Yitzhak Rabin.
The two leaders met at the Israeli Prime Minister's office in Jerusalem
on Friday during Gore's visit to mark the Jewish state's 50th birthday.
Following talks Benjamin Netanyahu suggested he would meet the Palestinians halfway in the current dispute over the withdrawal of Israeli troops in the West Bank.
Gore's visit comes ahead of a new round of diplomatic efforts planned by U-S Secretary of State Madeleine Albright who will meet Netanyahu and Palestinian leader Yasser Arafat on Monday.
At the forefront of her meetings will be security in the West Bank.
Until now, Israel's best offer has been a pullback from nine per cent of the land.
Palestinians meanwhile have accepted a U-S proposal for a withdrawal from 13 per cent as the absolute minimum.
''My optimism tells me that I hope that we'll have an agreement in London. My realism tells me that in order for that to be achieved, there would have to be a considerable stretching still even though the distance, the President is right, there is a distance that is certainly shorter, smaller than it was many months ago. But nevertheless it still remains and to be a realistic optimist I want to say that I hope there's stretching on both sides before this optimism is vindicated.''
SUPER CAPTION: Benjamin Netanyahu, Israeli Prime Minister
U-S officials have said they expect both leaders to make difficult decisions in London.
But Gore said Washington remained committed to Israel's security.
'''I came here not only to celebrate Israel's achievements, but also to restate our ironclad commitment to Israel's security and well-being in its next half-century and beyond.''
SUPER CAPTION: Al Gore, U-S Vice President
Following the meetings, Gore and Netanyahu lunched at the King David Hotel, where they traded toasts.
Gore also held talks with Labour Party Chairman Ehud Barak, the Israeli opposition leader.
Earlier on Friday, the U-S Vice President laid a wreath at the grave of slain Israeli Prime Minister Yitzhak Rabin.
Gore and his wife, Tipper, who visited the grave with Rabin's widow Leah, stood silently for a few minutes and then placed pebbles on the headstone, in line with Jewish custom.
The Gores also stopped at Jerusalem's Holocaust Hall of Remembrance, where they laid a wreath.
While Gore and Netanyahu met, Tipper Gore visited the Western Wall, Judaism's holiest shrine, with Netanyahu's wife, Sara.
Following Jewish custom, Mrs Gore slipped a note with a request into a crack between the honey-coloured boulders.
Asked what she wrote, Mrs Gore said: "God bless the children."