Jordan's King Abdullah said on Thursday Israel must give up its claim to Arab East Jerusalem and implement U.N. resolutions for the return of Palestinian refugees if it wanted permanent peace in the Middle East.

In one of his most critical remarks about Israel since coming to the throne in February, the king said Israel appeared to be using religion as a source of conflict.

"The Jerusalem problem poses a great challenge to those of us who are on the side of religion as a source of peace," he said in a speech opening a conference of 600 political and religious leaders of the world's main faiths.

"I am afraid that Israel, our peace partner, perpetuates exclusion by its persistence that Jerusalem, both Arab and Israeli, is its capital alone. This is a manifestation of discrimination and contrary to the right to self-determination," the king said.

"Jerusalem is too sacred and too symbolic for it to belong exclusively to one party. It can accommodate two capitals, one Palestinian and one Israeli, and belong, as it should, to the entire world at the same time."

The future of Jerusalem and the fate of around 3.5 million Palestinian refugees are to be discussed during "final status" negotiations between Israel and Palestinians that should conclude by September next year.

Israel says a united Jerusalem is its eternal capital. The Palestinians want East Jerusalem, captured by Israel from Jordan in the 1967 Middle East War, to serve as the capital of a future Palestinian state.

"It is valid to ask whether the culture of peace can ever come to fruition while the parties stand impotent in addressing the Jerusalem issue on the basis of inclusion and the refugee issue in accordance with the principle of justice," the king said.

"The plight of the refugees...is a distillation of the evils that one human group perpetrates against another."

King Abdullah said the international community must press for the implementation of United Nations Resolution 194 on Palestinian refugees.

"The refugees must exercise the right of return and they should receive adequate compensation, and must be rehabilitated in order for them to be able to live and work in peace and security with others," he added.

Jordan hosts around 1.2 million refugees and a majority of its population is of Palestinian origin. Jordan administered East Jerusalem and the West Bank from the creation of Israel in 1948 until 1967.

It signed a peace treaty with Israel in 1994 but ties between the two countries, though warmer than those between Israel and Egypt, the only other Arab country with a joint peace treaty, have not always been smooth.

The opening session of the five-day religious meeting in Amman, organized by The World Conference on Religion and Peace, was attended by Indonesian President Abdurrahman Wahid, Prince Hassan of Jordan and senior officials from Cameroon and Norway.

The Archbishop of Canterbury George Carey, Egypt's Grand Sheikh Tantawi and Rabbi David Rosen of Israel were also present.

Reuters