President Barack Obama described the increasingly tense environment in the Mideast as "unsustainable" and called on Wednesday for a "better approach" in blockaded Gaza, one that would satisfy the security and other needs of both Israel and the Palestinians.

Welcoming Palestinian leader Mahmoud Abbas to the White House for talks, Obama also predicted "real progress" in coming months in U.S. efforts to nudge the Israelis and Palestinians toward direct peace talks.

The meeting came a little more than a week after Israel's deadly May 31 raid on a flotilla hoping to break the blockade. Nine men in the flotilla were killed, including eight Turks and a Turkish American.

Israel says its soldiers opened fire only after they were mobbed by pro-Palestinian activists. The activists and their supporters say Israel's commandos began shooting unnecessarily.

Without joining international calls for Israel to end the embargo, Obama suggested a "new conceptual framework" to the blockade to ensure that both Israel's security requirements and the Gaza people's needs are met. He said he would discuss the idea with U.S. allies in Europe and the Middle East.

Israel says its 3-year-old blockade is needed to keep Gaza's Hamas rulers from smuggling in weapons. Critics say it has choked off contact with the outside world for Gaza and caused widespread suffering for its 1.5 million Palestinians.

"It seems to me that we should be able to take what has been a tragedy and turn it into an opportunity to create a situation where lives in Gaza are actually directly improved," Obama told reporters brought into the Oval Office at the conclusion of the meeting.

On Wednesday, Israel took a first step toward easing the blockade by allowing potato chips, cookies, spices and other previously banned food items into the Gaza Strip. But other needed items, such as supplies to rebuild their war-ravaged territory, remained mostly banned.

Obama said the flotilla raid was a "tragedy" and that it's important "that we get all the facts."

"What we also know is that the situation in Gaza is unsustainable," Obama said as Abbas sat alongside him in the Oval Office.

Asked whether Abbas asked him to take a tougher stance on the flotilla raid, Obama said he and Abbas spent most of their meeting time discussing how to solve "the problem" in Gaza.

Obama also announced that the U.S. was sending an additional $400 million in aid to Gaza.

Abbas' actual influence over Gaza is slight, since Hamas routed his forces when they took over the area in 2007. But Abbas welcomed the new money as a "positive sign" that the U.S. cares about Palestinians. He also urged that the "Israeli siege of the Palestinian people" be lifted.

"What we care about is living in coexistence with Israel," Abbas said.

Obama said both sides have to do the work necessary to create the conditions for peace. The U.S. supports a two-state solution in which the Palestinians and Israelis can live peacefully side by side.

"Both sides have to create an environment, a climate that will be conducive to an actual breakthrough," Obama said, adding that means the Israelis must curb settlement construction in disputed areas and the Palestinians must make progress toward security, among other issues.

Obama said the U.S. is fully committed to seeing the effort through.

"We will continue to work side by side with you as well as the Israelis," Obama told Abbas.

Obama's meeting with Abbas was to have followed a similar session between Obama and Israeli Prime Minister Benjamin Netanyahu at the White House on June 1. But Netanyahu canceled that meeting to return home after the flotilla raid.

Though indirect talks between the two sides are under way, the United States has been pushing to restart direct negotiations. Progress toward the goal has been slow and now possibly complicated by the deadly May 31 confrontation.

On Monday, Israel's naval forces shot and killed four men in wet suits off the Gaza coast. The militant group Al-Aqsa Martyrs' Brigades said the men belonged to a marine unit training for a mission. The Israeli military said the men were preparing for an attack on Israel.

Netanyahu and Obama agreed to reschedule their meeting, though a new date has not been announced. Obama spokesman Robert Gibbs said Wednesday, "we have not settled on a date as of yet. But we have been in discussions with them on coming back, maybe as early as the end of the month."