President Bush’s peace mission to the Middle East was in trouble even before left from Washington last night, after rockets from Lebanon hit northern Israel and the Jewish state threatened to launch a large military incursion into the Gaza Strip to stop similar attacks in the south.

The two Lebanese rockets, which caused no injuries or damage, landed a day after US ships came close to opening fire on Iranian gunboats in the Gulf, further underscoring the challenges that President Bush faces in strengthening regional alliances against Tehran and its allies in Lebanon and Gaza.

Last week Israel launched bloody raids into the Hamas-run Gaza Strip after militants fired a Katyusha-style missile at the southern city of Ashkelon. The Israeli military has cautioned of the danger of longer-range, Iranian-made rockets being smuggled into Gaza to trap the Jewish state’s urban coastal cities between Hamas fire to the south and Hezbollah barrages from the north.

Ron Prosor, the new Israeli Ambassador to Britain, gave warning that his country’s patience was running out after 138 rocket attacks this year from Gaza. His remarks cast fresh doubts on the chances of a breakthrough in the peace process in 2008, when the Bush Administration has stated that it would like to see the creation of a Palestinian state living side by side with Israel.

Mr Prosor, a career diplomat who has previously served in London, said that this year would be decisive.

“I see the year 2008 as a crossroads: it is either \ Abbas or Hamas \,” he told The Times. He added that Western democracies had no idea of the pressure that Israel was under from Palestinian attacks.

“If this continues then Israel, like any other government, will be compelled to act on a large scale,” he said.

Military officials on both sides agree that any large-scale push into the densely overpopulated Gaza conurbation would be bloody and costly. But Israel estimates that about 20 Iranian-made Katyusha-style rockets have been smuggled into Gaza already and fears that more are on their way.

On his maiden visit to the Holy Land, President Bush will be under pressure to push Israel to dismantle illegal Jewish settlement outposts in the West Bank, and to urge the weak Palestinian administration of President Abbas to rein in militants in the areas that he still controls.

Israel is expected to demand the right to pursue militants in the Palestinian territories even during future negotiations. Last week it staged a four-day raid on Nablus in which more than 40 people were injured, provoking anger from Salam Fayyad, the Palestinian Prime Minister.

“These operations destroy our efforts in the field of security, which started bearing fruits lately in a way that people felt the change,” Mr Fayyad said. The Jerusalem Post reported yesterday that the US was considering an interim force in the West Bank, possibly made up of Nato or Jordanian and Egyptian troops, to ensure security if Israel withdraws.

Mr Bush’s visit is aimed at capitalising on an agreement between Israel and the Palestinian Authority at the Annapolis summit to resume talks on setting up a Palestinian state, after a seven-year hiatus.

Yesterday Mr Abbas met Ehud Olmert, the Israeli Prime Minister, who enjoys close ties to President Bush, and agreed to authorise their negotiating teams to conduct “direct and ongoing negotiations on all the core issues”, a spokesman for Mr Olmert said.

Mr Olmert faces an uncertain political future, however, with his right-wing National Security Minister threatening to quit the Government if core issues, such as borders and the status of Jerusalem, are on the negotiating table.