JERUSALEM (Reuters) - Israeli Prime Minister Ehud Olmert hopes to agree a peace deal with the Palestinians before President George W. Bush leaves office, an Israeli government official said on Friday.

"There are big advantages to reaching an agreement before the end of Bush's term. This is the right thing to do. It is the best thing to do for both sides," an official quoted Olmert telling German Foreign Minister Frank-Walter Steinmeier.

Olmert expressed hope an agreement on core issues, including refugees, borders, and the fate of Jerusalem, could be reached, but stopped short of saying such a deal would be possible.

The official said Olmert wanted to seize the opportunity because it was impossible to know how committed the next U.S. administration would be to solving the Israeli-Palestinian conflict.

Olmert wants to take advantage of a commitment by the Bush administration that Israel could keep control of large West Bank settlement blocks in any peace deal.

Olmert also sees the current Palestinian leadership of President Mahmoud Abbas and Prime Minister Salam Fayyad as another reason to push forward now.

Palestinians are seeking a timeline for a peace deal, but Israel is opposed to such a condition, fearing renewed violence should the talks collapse.

The Palestinians have said they want an agreement reached by August, when the campaign for the U.S. election in November 2008 heats up. Bush will leave office in January 2009.