Brown clashed with his Israeli counterpart Ehud Olmert over his demand to freeze the building of settlements in the West Bank and pledged new aid to the Palestinians as part of efforts to kick-start their economy. Brown was making his first visit to Israel and the West Bank since becoming premier in June last year.
US-sponsored talks between the two sides are aimed at resolving the conflict before US President George W. Bush leaves office next January. However, the talks have become bogged down amid violence in the Islamist Hamas-ruled Gaza Strip and the expansion of Jewish settlements.
Asked by AFP whether he was confident that a deal could be reached on schedule, Brown said: "When I say the difficulties can be bridged, that the problems that I have had described to me I believe can be solved, then I think there is an opportunity within our grasp.
"There is a sense from what I have heard today that people feel that they can get to a solution. The sooner that happens, the better. I'm urging people to move forward with as great speed as possible." He told reporters that stakeholders should not lose sight of the "big prize" of a comprehensive settlement.
"What separates the sides is not unbridgeable. My own view is that there is good will to move these things forward. "My advice is to concentrate on the main elements of a final peace agreement but...all the central issues that are preventing a resolution of the whole Israeli-Palestinian issue will have to be sorted out."
Brown crossed Israel's separation barrier for talks in the West Bank town of Bethlehem with Palestinian president Mahmud Abbas and prime minister Salam Fayyad.
"We have pledged 500 million dollars for economic development in Palestine over three years to 2011," Brown said after meeting Abbas. "I can announce today a further commitment of 60 million dollars," Brown said, bringing total British aid in 2008 to 175 million dollars.
Abbas thanked Brown for his support as the Scot called on Israel to lift checkpoints in the West Bank and halt the growth of Jewish settlements. Brown said their expansion had "made peace harder to achieve."
Settlement expansion "erodes trust, it heightens Palestinian suffering, it makes the compromises Israel will need to make for peace more difficult," Brown said, adding that there must also be a halt to violence on both sides. Olmert admitted Brown had criticised Israel's settlement policy to his face.