RAMALLAH, West Bank – Saying the time is now for a Palestinian state, Secretary of State Condoleezza Rice on Monday prodded Israel and the Palestinians to agree at a U.S.-sponsored conference this fall on how and when to start formal peace talks.

In one of her strongest statements yet on the issue, Rice declared that creation of a Palestinian state is a key U.S. interest and urged the two sides to drop contentious demands and reach consensus on a substantive joint statement ahead of the international conference.

“Frankly, it’s time for the establishment of a Palestinian state,” Rice told a news conference with Palestinian Authority President Mahmoud Abbas, who she saw on the second of a four-day intense Middle East shuttle diplomacy mission.

“The United States sees the establishment of a Palestinian state and a two-state solution as absolutely essential for the future, not just of Palestinians and Israelis but also for the Middle East and indeed to American interests,” she said.

“That’s really a message that I think only I can deliver,” Rice said, explaining her mission to prepare for the conference to be held in Annapolis, Md. as early as late November.

The secretary is facing daunting challenges in trying to bring the two sides close enough to make the conference worthwhile.

Rice, who expects to return to the region at least once before the conference takes place, played down the chances for any breakthroughs before she traveled here.

Rice met with Israeli officials on Sunday and will see both sides again today after visiting Egypt yesterday and finally traveling to London to meet Jordan’s King Abdullah II in a bid to build support for the meeting among skeptical Arab nations.