By Cynthia Johnston

DAMASCUS, Nov 11 (Reuters) - A U.S. lawmaker, on a lightning trip to Syria, said on Tuesday Washington still has major differences with Damascus, which is under U.S. pressure to cooperate in its war on terror.

"We understand there are still major differences between the United States and Syria in our policies," Jim Kolbe, head of a visiting delegation of U.S. lawmakers, told reporters.

"But we believe a dialogue is the way in which we can help to repair that relationship.

"Terrorism is now at the top of everybody's priority in the United States and there are many people...in Congress who believe that Syria has not done as much as it might have done," said Kolbe, a Republican in the U.S. House of Representatives.

Kolbe's remarks came after talks with Syrian President Bashar al-Assad and Foreign Minister Farouq al-Shara, who also held talks on Iraq with British Special Representative for Iraq Jeremy Greenstock. Syrian-U.S. ties have been strained over accusations by Washington that Damascus is turning a blind eye to militants crossing its border to fight U.S. troops in Iraq. U.S. President George W. Bush has blamed "foreign terrorists" in part for a wave of violence there.

Syria, which said last week relations with Washington were the most negative in years, says it is working to secure the border and has called on the United States to do the same on the Iraq side.

IRAQI ASSETS

Kolbe, who chairs the Appropriations foreign aid subcommittee, said Washington also wanted to work with Syria in returning hundreds of millions of dollars in Iraqi assets that Washington believes may be hidden in Syria.

U.S. media reports have quoted American officials as saying they believe up to $3 billion from Saddam Hussein's ousted government was being held in banks in Syria and Lebanon. A State Department spokesman has said that number sounded high.

Syria has dismissed the reports.

"We...look forward to working with Syria to return the assets from Iraq to that country so that the people of that country can use them to help to rebuild their country," Kolbe said.

Washington has accused supporters of the former government of funding violence in Iraq by paying attackers using money smuggled by Saddam's government before Baghdad's fall in April.

Syria is also facing pressure over its backing of Lebanese Hizbollah guerrillas and Palestinian groups opposed to Israel, which last month bombed what it said was a training camp for militants deep in Syria.

The U.S. House of Representatives also voted last month to impose diplomatic and economic sanctions on Syria until the White House says it no longer supports "terrorists". If the Senate approves the measure as is expected, Bush could sign it into law.