Charles Kennedy has called for a greater role for the EU in solving the Middle East crisis.

The Liberal Democrat leader warned on Thursday that a worrying gap is developing between the EU and US responses to the deteriorating situation between Israel and the Palestinians.

With the New Year beginning with a wave of suicide bombings and Israeli retaliations, Kennedy said that the latest round of violence has achieved nothing in military or political terms.

He gave his support for the government view that a twin-track approach establishing a Palestinian state and recognition of Israel's right to exist is the only viable solution to the crisis and that eventually the two sides will have to return to the negotiating table.

His address to the New Israel Fund was the latest stage in his bid to show that his party is now a serious contender on the political stage.

Kennedy and his frontbench team are set to "engage actively in dialogue" with key interest groups involved in foreign affairs to show the party has policy ideas beyond its traditional areas of home affairs and political reform.

Kennedy said that the EU's relationships with Israel and the Palestinian Authority is increasingly at odds with the US, which is now giving greater backing to Israel's hardline leader Ariel Sharon.

"There is a worrying and widening divergence on this issue between the United States and the European Union. The US administration appears to be lining up behind Mr Sharon and calling for Yasser Arafat to step down. The EU said last week that Mr Arafat is a partner who is needed to control terrorism and talk peace," he said.

Kennedy called on Tony Blair to use his influence on the US government to create a joint initiative that would be more effective in bringing pressure to bear on both sides.

"Neither the United States acting by itself nor the European Union on its own is likely to have a decisive effect on the prospects of peace. A joint initiative by the two would be a different matter."

"Europe stood shoulder to shoulder with the United States after September 11th," he said.

"Now is the time for the USA to stand shoulder to shoulder with the European Union to achieve peace in the Middle East. The prime minister is respected by the US administration. A Bush-Blair initiative to bring the EU and the USA together in this cause would be a very welcome development indeed."