Those divisions that have obviously been apparent in the last few months can be healed

Tony Blair

Mr Blair also denied a cabinet rift over action against Iraq, but Labour MP George Galloway has warned the issue could split the government and even topple the prime minister.

It is the conflict between Israelis and Palestinians that is currently the dominating problem in the Middle East.

Asked if Israeli Prime Minister Ariel Sharon's action against the Palestinians had made the international war on terror more difficult, Mr Blair said it had driven "a big wedge between sections of the Arab world and the West".

But insisting a solution could be found he said: "We're never going to manage this situation through military or security measures alone.

"There has to be a political process and I think if one does come together then those divisions that have obviously been apparent in the last few months can be healed."

Mr Blair said Israel must withdraw from Palestinian territory and cooperate with a UN mission to the Jenin refugee camp, where Palestinians claim a massacre took place.

But he added: "We shouldn't forget either the problems Israel faces when its citizens are being targeted by terrorist suicide bomb attacks and also dying in large numbers.

We would be better off without Saddam Hussein in power

Tony Blair

"Innocent people are dying and the reason that's happening is because if there is not a political process the extremes move into the vacuums created."

Mr Blair said Britain was committed to playing its part in finding a political solution, through working with its partners in the Arab world, Europe and the US.

Asked how close action against Iraq was, the prime minister said no decisions had been made on what type of action to take, although the evidence it was trying to obtain weapons of mass destruction was "vast".

Mr Blair added: "Saddam Hussein is a threat to the world - we would be better off without Saddam Hussein in power."

He said: "In the meantime the claim to Saddam Hussein is 'get the weapons inspectors back in there, that's what the UN has told you to do, you are in breach of those resolutions, fulfil your obligations under them'."

Mr Blair denied newspaper reports that Chancellor Gordon Brown thought he was 'gung-ho' over Iraq.

He said there was no rift with his colleague, and the Cabinet as a whole was convinced of the need to act - even if some were asking "sensible questions".

Blair defeat warning

"They are asking 'is it sensible to do this at the same time as the Middle East is in problems? Have we worked out the right military options? What's the role of the UN'?", Mr Blair said.

But in a pre-recorded interview for Scottish Television, Glasgow Kelvin MP George Galloway issued a blunt warning over possible UK-backed action against Iraq.

"I think it would split the Labour Party right down the middle and it could - I know this sounds fancy - it could led to the defeat of the Blair leadership in the Labour Party," he said.

Mr Galloway said there was already unhappiness on a range of issues and Iraq could be the "straw that broke the camel's back".