Singapore's Coordinating Minister for Defence and Security, Tony Tan, also told the final day of the Asia Security Conference that the United States' approach to the issue was a powerful propaganda tool for Islamic terrorists.

"We are good friends with Israel, we are good friends with the United States," Tan said during a session on global terrorism.

"But as my prime minister has said... a balanced approach by the United States towards the Israeli-Palestinian conflict is necessary if the Muslim world perceives the approach by the United States as unbalanced and tilted towards the Israelis.

"It must contribute as a propaganda tool to the sense of outrage, to the sense of resentment. It inspires suicide bombers not only in the Middle East but also throughout the world."

Although Singapore, a majority ethnic-Chinese nation, is a close ally of the United States and enjoys warm relations with Israel, it is heavily involved in trying to subdue Islamic terrorism in Southeast Asia.

Neighbouring Malaysia, which is a majority Muslim nation, has also struggled with the problem, and Defence Minister Najib Razak repeated his nation's concerns over the impact of the Middle East conflict.

"Not everything, but the core of the (terrorist) problem is the Palestinian issue and it was not Saddam Hussein," Najib told the conference in reference to one of the reasons the United States gave for invading Iraq last year.

"We do not have any love for Saddam Hussein but the core issue would be a peaceful resolution of the Palestinian conflict.

"The question is, after the Iraq war, has the world become a safer place? I think the answer is no... the priority would be to handle the Palestinian-Israeli conflict and seek a fair resolution."

Singapore Prime Minister Goh Chok Tong opened the conference on Friday by warning the United States it needed to adopt a more balanced approach to the Israeli-Palestinian issue to win the war on terrorism.

"This is too important an issue to dress in diplomatic niceties. The US is essential to the solution but it is also part of the problem," Goh said, with US Defence Secretary Donald Rumsfeld in the audience.