In the square where Yitzhak Rabin was slain, Peace Now marked a bittersweet milestone Tuesday: Over the past 30 years, it has helped push the Israeli mainstream to embrace Palestinian statehood. But peace remains elusive.

The group pitched a tent in the square where the Israeli prime minister was gunned down in 1995 by an ultranationalist zealot trying to sabotage his attempt to trade land for peace with the Palestinians. Israel's largest peace rallies also took place there.

Only a few hundred invited guests attended afternoon panel discussions, highlighting what critics say has been one of Peace Now's biggest failings - to reach out to working class or religious Israelis, who traditionally hold hard-line views.

An exhibit documented the group's history, from its founding in 1978 by several hundred army reserve officers. Peace Now veteran Yair Inov, 81, recognized himself in a photograph from the 1980s, showing a few activists protesting at a new West Bank settlement.

"To a certain extent, it's a sad day," Inov said. "I cannot call (the past 30 years) a success. A peace agreement with the Palestinians, that's the key."

Just a few hours earlier, at a nearby news conference, a veteran Israeli negotiator warned that prospects for a peace deal this year are increasingly slim.

Israeli and Palestinian negotiators would have to intensify the pace of talks dramatically in order to meet the U.S.-backed December 2008 target date, said Yossi Beilin, a key player in negotiations in the 1990s and a participant in a failed Mideast summit in 2000.

The leaders of the Israeli and Palestinian negotiating teams meet once or twice a week, while Palestinian President Mahmoud Abbas and Israeli Prime Minister Ehud Olmert hold intermittent talks.

"Our main message is that those who really want to make peace in a year need to change their mode of operations dramatically," Beilin said. "If the behavior remains what it is today ... you cannot reach an agreement this year."

The Palestinians want a state in all of the territories Israel captured in the 1967 Mideast war - the West Bank, Gaza and east Jerusalem. Israel has expressed willingness to give up land, but has said it would not return to the 1967 borders and intends to hang on to large Jewish settlement blocs in the West Bank.

The most explosive issues are the fate of Palestinian refugees and their descendants, and a division of Jerusalem.

When Peace Now was founded, negotiations with the PLO and the establishment of a Palestinian state were considered radical ideas by many Israelis. The country remained bitterly divided among those ready to give up much of the land captured in 1967 and those who were not.

Polls now suggest a majority of Israelis would be willing to reach a land-for-peace deal. However, many Israelis also doubt the Palestinians could implement an agreement, in part because of the growing influence of the Islamic militant Hamas, which seeks Israel's destruction.

Peace Now leader Yariv Oppenheimer noted that Israeli settlement expansion has continued without letup in the past three decades - some 450,000 Israelis now live on land claimed by the Palestinians - and that it will become increasingly difficult to set up a Palestinian state.

"It seems that the most terrible thing that happened to us is that our position became the mainstream position, but on the other hand it's much harder to implement it on the ground than it was 30 years ago," he said.

"We had some achievements, and the settlers had a lot of achievements as well," he said. "But without Peace Now, I think the West Bank would look even worse than it looks today."

Peace Now was founded in 1978 by army reserve officers who appealed to then-Prime Minister Menachem Begin not to miss a historic opportunity for a peace deal with Egypt.

Its role grew with widening opposition to Israel's 1982 invasion of Lebanon, and a protest that year against the massacre of Palestinian civilians by an Israeli-allied militia in Lebanon was described as Israel's largest demonstration.

In later years, Peace Now monitored Jewish settlement expansion.

Daniella Weiss, a settler leader, denounced Peace Now activists Tuesday. "Peace Now wants to give the historic Jewish homeland away to the enemy, and that makes them back-stabbing traitors," she said.

Israel Harel, another settler leader said, "The movement signals Israeli weakness."

"The outcome is not peace now, it is war now, it is a war of terror and a much bigger war of terror than ever before," he said.

Former Palestinian Cabinet minister Sufian Abu Zaydeh, who frequently appears on Israeli radio and TV shows, agreed that attitudes have changed in three decades. "Unfortunately, the problems are still the same problems," he said.