"It's a good opportunity. It gives the Palestinians a chance to create a reformed, just and free government. Palestinian leadership must rise to the challenge. It gives all sides a chance to reinvigorate progress on the [U.S.-backed] road map [for peace]," Bush said.
The Sharon plan calls for the withdrawal from the Gaza all Israeli settlers by the end of 2005. After the withdrawal, the plan says Israel would no longer consider itself responsible for the Palestinian residents of Gaza.
Sharon also seeks to dismantle four settlements in the northern West Bank and to remove all Israeli roadblocks surrounding them. Other settlements would remain for now. Sharon has said he has no intention to withdraw all the settlements in the West Bank as part of a peace accord.
British Prime Minister Tony Blair, who held talks with Bush at the White House yesterday, also endorsed the Israeli plan.
"We welcome the Israeli proposal to disengage from the Gaza and parts of the West Bank. We want the Quartet to meet as soon as possible to discuss how it can support the Palestinian Authority in particular, economically, politically, and in respective security to respond to that offer," Blair said.
European Union foreign policy-chief Javier Solana announced that the Quartet -- Russia, the EU, United Nations, and United States -- sponsors of the Middle East road map peace plan are likely to meet by the end of this month, probably in Berlin.
The Palestinian leadership has denounced the Sharon plan, saying it seeks to legitimize taking what their land. The EU also expressed concern.
Bush said peace negotiations between the Israelis and the Palestinians should decide outstanding issues.
"There's a lot of talk about the final-status discussions. And that's all and good. The problem is that people, by doing so, don't pay attention to the moment. It's a moment we've got to seize. See, the final status discussions will become a lot plainer. And, by the way, we're not going to prejudge the final status discussions. But the answers will become a lot plainer once there's a peaceful state that's committed to fighting off terror and a state that's capable of providing hope for its people," Bush said.
Blair said the U.S.-backed road map for peace -- a document that envisions a secure Israel and an independent Palestine -- remains the framework for negotiations.
"I see this not in any shape or form as pushing the road map to the side. On the contrary, I see it as a way back into the road map. Now, I know there will be all sorts of issues to do with the final-status negotiations, and, as the president said, no one's prejudging those. But, you know, let's not look this opportunity in the eye and then turn away," Blair said.
The Sharon plan also rules out the return of Palestinian refugees to Israel, an idea vehemently opposed by Palestinians.