(Updates with fresh Rice quote)

By Sue Pleming

PERTH, Australia, July 25 (Reuters) - U.S. Secretary of State Condoleezza Rice said on Friday there was still time for Israelis and Palestinians to reach a peace deal by the end of 2008.

Rice said trilateral peace talks in Washington next week between the United States, Israel and the Palestinian Authority should be closed to offer the best hope of progress.

Rice said the latest round of talks which began in Annapolis in the United States in November 2007 had laid a "firm foundation on which these two parties can finally end their conflict".

"There is still time for them, in accordance with the Annapolis, to reach agreement by the end of the year and we will keep working towards that goal," Rice told a news conference in Perth in western Australia on Friday.

The United States revived Palestinian statehood negotiations between the Israelis and the Palestinians at a conference in Annapolis, Maryland, last November, with the hope of completing a deal by the time President George W. Bush leaves office.

But disputes over Jewish settlement expansion on occupied West Bank land, a corruption scandal involving Israeli Prime Minister Ehud Olmert, Palestinan President Mahmoud Abbas's own political troubles, and security issues have all undercut U.S. efforts.

Rice plans to host peace talks between chief Palestinian negotiator Ahmed Qurie and his Israeli partner, Foreign Minister Tzipi Livni, in Washington on July 30.

Rice said the Washington talks should remain confidential.

"The most effective negotiations they probably ever had were Oslo and no one ever knew they were negotiating," said Rice.

"We won't be providing details of what goes on in the trilateral. The Israelis and Palestinians have their first serious peace process in seven years and they are discussing very sensitive and difficult issues," she said.

"The work now is to keep pressing ahead, but pressing ahead in a way that preserves the workability of this process and that really means preserving the confidentiality of this process." (Writing by Michael Perry; Editing by Bill Tarrant)

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