President Bush Monday laid out tough conditions for the creation of an independent Palestinian state, calling on the Palestinians to elect new leaders and adopt sweeping reforms. The president outlined his vision for Mideast peace in a much-anticipated speech at the White House.

For the sake of all humanity, President Bush says it is time for change in the Middle East. "My vision is two states living side-by-side in peace and security. There is simply no way to achieve that peace until all parties fight terror," he said.

Mr. Bush says a Palestinian state will come through reform, not terror. He wants Palestinians to choose new leaders in multi-party elections by the end of the year, to restructure security forces and create what he calls a "practicing democracy based on tolerance and liberty."

He said, "If the Palestinian people actively pursue these goals, America and the world will actively support their efforts."

Mr. Bush says he expects Israel to respond to those reforms by withdrawing from Palestinian areas and stopping settlements in occupied territories.

While he did not lay-out a timetable for the process, the president says it could be completed in three years with the hardest issues including final borders and control of Jerusalem, left to negotiations between Israel and the provisional state.