United States President George W. Bush was encouraged by moderates' gains in last week's Iranian elections but is concerned that Iran is destabilizing the Middle East, Jewish leaders who met with him said.

In local elections across Iran, allies of President Mahmoud Ahmadinejad lost ground among the main political groups, which analysts have said was a setback for the fiery leader and a possible sign of growing frustration among Iranians.

"He (Bush) was encouraged by the recent Iranian elections, the moderates gaining some strength," said Rabbi David Ellenson, president of the Hebrew Union College-Jewish Institute of Religion, who met with Bush on Monday.

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Bush gathered Jewish education leaders and students at the White House to discuss the role of religion in schools. The closed-door discussions also touched on other issues including the war in Iraq, spreading democracy and the crisis in Darfur.

Iran has been pushing forward with its plans to enrich uranium as part of what it says is a peaceful nuclear energy program, despite the threat of UN sanctions. The West fears the effort is aimed at building nuclear weapons.

The United States and other major powers have condemned Ahmadinejad for his call for Israel to "be wiped off the map" and for sponsoring a conference questioning whether the Nazi Holocaust happened.

Bush has made no public comments about the Iranian election but at a news conference on Wednesday he said there was a "better way forward" for the Iranian people.

"My message .... is, you can do better than to have somebody try to rewrite history," he said. "You can do better than somebody who hasn't strengthened your economy. And you can do better than having somebody who's trying to develop a nuclear weapon that the world believes you shouldn't have."

Bush administration officials have said they want to resolve the nuclear dispute diplomatically and played down any suggestion of an attack on Iran. Yet the Pentagon is considering sending a second aircraft carrier to the Gulf in part to discourage what it deems Iran's provocative behavior.

Bush and other U.S. officials have accused Tehran of meddling in the Middle East by supporting insurgents in Iraq and destabilizing the democratically-elected government of Lebanon.

"He restated his support for state of Israel, which is very much threatened by situation in Iran," Karen Bacon, dean at Stern College for Women of Yeshiva University, said.

White House National Security Council spokesman declined to comment on the meeting.

The Bush administration has allocated tens of millions of dollars to promote democracy in the Middle East, including more than $36 million to beam television and radio programming into Iran.