TUNIS, Nov 29 (Reuters) - Palestinian President Mahmoud Abbas told his people on Thursday the "moment of truth" on Palestinian statehood has come, following his participation in the Annapolis conference in the United States.

Israeli Prime Minister Ehud Olmert and Abbas agreed at the conference hosted by U.S. President George W. Bush this week to try to forge a peace treaty and create a Palestinian state by the end of 2008 -- a time scale sceptics say is too ambitious.

"The time of extravagant promises by one rival trying to outbid another must go without a return," Abbas told a rally in Tunis, where he stopped on his way back from the United States. "Now is a moment of truth, not one of illusion," he added.

Abbas is locked in a power struggle with Hamas Islamists who control Gaza, part of the territories occupied in the 1967 Middle East war where Abbas wants to establish a Palestinian state.

The Israeli and Palestinian public are also sceptical. A poll in Israel's top-selling daily showed 83 percent of Israeli respondents did not expect a peace deal within a year, while many Palestinians doubt Abbas will protect their interests.

"The stark truth says that the whole world recognised our Palestinian state with its East Jerusalem as its capital," Abbas said.

The Palestinian leader described future peace negotiations with Israel as a "political battle" but said he was optimistic about the outcome.

Negotiators will meet again on Dec. 12 in Jerusalem.

"We are starting a political battle on very complex and complicated negotiations with the aim of establishing a Palestinian state," he said.

Abbas was addressing members and officials of Tunisia's ruling Democratic Constitutional Rally party gathered in Tunis to voice support for his efforts to forge a deal with Israel on a Palestinian state.

"My heart is full of hope about the negotiations.... The new opportunity must be exploited with seriousness and faithfulness and we should repudiate mistrust and fears," he added. (Reporting by Tarek Ammara; editing by Sami Aboudi)

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