US Secretary of State Condoleezza Rice. [file]

Speaking at a dinner hosted by Palestinian-Americans, Rice said she was committed to the goal of a Palestinian state where the people lived in peace alongside Israel as proposed under the stalled US-sponsored "road map" for Middle East peace.

"The Palestinian people deserve a better life, a life that is rooted in liberty, democracy, uncompromised by violence and terrorism, unburdened by corruption and misrule and forever free of the daily humiliation of occupation," she told a dinner organized by the American Task Force on Palestine.

"I believe there could be no greater legacy for America than to help bring into being a Palestinian state for people who have suffered too long, have been humiliated too long," added Rice, whose government is accused by Arab states of siding with Israel in the conflict.

Rice was in Israel and the Palestinian Territories last week, where she met Israeli officials and Palestinian President Mahmoud Abbas in what the Bush administration says is a new drive to revive the moribund Middle East peace process and bring in moderate Arab leaders.

However, the trip did not appear to make much progress in attempts to bolster Abbas, who has failed to pull together a unity government with the militant group Hamas.

The United States has cut off direct aid to the Palestinian Authority since the election of Hamas last January, but has continued limited humanitarian assistance via aid groups.

"Either you are a peaceful political party or a violent terrorist group. You cannot be both," Rice said of Hamas.

She said the Quartet of Middle East peace brokers was holding firm to the principle that Hamas had to meet three obligations -- renounce violence, accept Israel's right to exist and recognize previous peace deals, including the U.S.-sponsored road map.

"I know that sometimes, a Palestinian state living side by side in peace with Israel must seen like a very distant dream but I know too ... that there are so many things that once seemed impossible that after they happened they simply seemed inevitable," she said.