(Adds Blair proposals, previously WASHINGTON)

JERUSALEM, Nov 4 (Reuters) - Middle East envoy and former British Prime Minister Tony Blair said on Sunday he hoped to announce a series of projects soon to help bolster the Palestinian economy.

Blair told a conference in Jerusalem that formal negotiations over creating a Palestinian state should not be "impossibly difficult". But he acknowledged the path was "utterly fraught" and both sides had to take steps to build confidence.

Blair said he has presented Israeli and Palestinian leaders with set of proposals meant to improve economic conditions in the occupied West Bank.

"They (the Palestinians) need change on the ground," he said, citing major development projects, including some near the West Bank town of Jericho.

Blair said his goal was to announce the first set of economic projects and "a process for getting them actually done" before a U.S.-sponsored conference on Palestinian statehood.

Blair and U.S. Secretary of State Condoleezza Rice are trying to bridge gaps between the two sides before the conference, expected in the last week of November in Annapolis, Maryland, although no date has been announced.

Israel and the Palestinians are still at odds over a joint document for the conference, which would serve as a launching pad for negotiations on core issues such as borders and the fate of Jerusalem and millions of Palestinian refugees.

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