Bush warns Iran of 'serious consequences'

President George W Bush warned Iran of "serious consequences" if it meddles again with US warships in the Persian Gulf, opening a Mideast peacemaking mission on an ominous note.

He told Israel to dismantle unauthorised settlement outposts and demanded that the Palestinians halt rocket attacks from areas controlled by Hamas Islamic militants.

Bush, on his first visit as president to Israel, acknowledged widespread doubts about whether he can break through decades of distrust to achieve his goal of a major peace agreement by the end of his presidency in January, 2009.

"I'm under no illusions," Bush said at a news conference yesterday with Israeli Prime Minister Ehud Olmert. "It's going to be hard work."

Unpopular at home, Bush got an extremely warm welcome in staunch ally Israel. With his presidency slipping away and skepticism about the seriousness of his commitment to Mideast peacemaking, Bush hopes an accord would improve a legacy tarnished by an unpopular Iraq war, economic anxieties and other problems.

Already a troubling issue for Bush, Iran jumped back into the spotlight Sunday when Iranian boats harassed and provoked three American Navy ships in the strategic Strait of Hormuz. US officials said Iran threatened to explode the vessels, but the incident ended peacefully.

Bush said "all options are on the table" to protect US ships. He said the Iranian boats "were very provocative and it was a dangerous gesture on their part. ... And they know our position, and that is: There will be serious consequences if they attack our ships, pure and simple. And my advice to them is don't do it."