The world`s most wanted terrorist, Osama Bin Laden, has released a new audiotape saying Muslims have a duty to wage holy war to liberate Palestinian land, according to Sky News.

The al Qaeda chief released the tape to coincide with the 60th anniversary of the founding of Israel.

In it, he said his terror network would continue to fight Israelis, and would refuse to give up any of the territory that should belong to Palestinians.

"We will continue, God permitting, the fight against the Israelis and their allies... and will not give up a single inch of Palestine as long as there is one true Muslim on earth," he said.

The authenticity of the tape, which was posted on an Islamist website, could not immediately be verified, but the voice sounded like that of bin Laden.

He said the Israeli-Palestinian conflict was at the heart of the Muslim battle with the West and an inspiration to the 19 bombers who carried out the September 11 attacks on the US.

The Saudi-born terror chief said Israel`s anniversary celebrations showed not only that the Jewish state was 60 years old, but also that it did not exist 60 years ago and was established on land violently seized from Palestinians.

He also railed against the Western media, which he said had over the years painted Israelis as victims and the Palestinians who had been displaced from their land as terrorists.

Bin Laden mocked peace efforts he said had been going on for 60 years but failed to establish a Palestinian state and said the deployment of an international force in southern Lebanon proved the West backed and protected Israel.

The speech is addressed to "Western peoples" and entitled "The Causes of Conflict on the 60th Anniversary of the State of Israeli Occupation".

George Bush has just left Israel after a visit timed to coincide with the anniversary during which he tried to give fresh momentum to the peace process.

At the same time, Palestinians staged demonstrations to commemorate the date of the event they call the "Nakba", or catastrophe, for their people.