Updated

Saudi Arabia’s ambassador called for more U.S. cooperation on diplomatic efforts in the Mideast as Congress questioned U.S. officials Tuesday about the kingdom’s Al Qaeda connections.

Saudi Ambassador to the United States Turki bin al-Faisal, in his first speech since he was tapped for the post last summer, said his country has shown it is an ally to the United States in the War on Terror. He cited the kingdom's efforts to question thousands of people, detention of more than 800 suspects, and the killing or capture of more than 100 known terrorists.

Click on the video box to the right to watch a report by FOX News' James Rosen.

“Our security forces are actively tracking and chasing down any terrorist groups or individuals found to be operating within the Kingdom,” he said.

"These deviants do not represent the Saudis or the Islamic faith," he said.

But the ambassador, while praising President Bush for calling for a Palestinian state, also said the Arab-Israeli dispute was an "open wound" that leads to terrorism and criticized the White House for an "uneven handling" of the conflict.

Speaking at the annual conference of the Middle East Institute, a private research group based in Washington, D.C., the ambassador said the Arab-Israeli dispute "is the cause more than all others" that has led to attacks and violence.

However, al-Faisal did not openly condemn recent remarks by Iranian President Ahmadinejad that Israel should be wiped off the face of the Earth. The ambassador said his country prefers to talk to Iran "privately," though he did not specifically say whether it had done so on this issue.

In response to an earlier question on Iran, al-Faisal said Riyadh believes it's better to engage Iran than to isolate it, which is the preferred path of the U.S.

"We believe by talking we can achieve more," he said.

Meanwhile, lawmakers on Capitol Hill were talking Tuesday about Saudi Arabia’s efforts to improve its cooperation in the War on Terror.

A U.S. Treasury Department official told the Senate Judiciary Committee that the Saudis have taken steps to change, but “they must also work equally diligently to thwart the funding of Palestinian terrorist groups that undermine peace and stability in the Middle East.”

Daniel L. Glaser, deputy assistant secretary in the office of terrorist financing, said the infamous "Account 98," a financial pipeline to suicide bombers thought to have been closed, may still be active. He described as troubling a television program aired in Saudi Arabia in August that solicited funds for the Saudi Committee for the Support of the Al Qaeda intifada.

"The United States shares Saudi Arabia's concern for meeting the humanitarian needs of the Palestinian people, but it is vitally important for Saudi Arabia to act resolutely against all terrorist organizations and to cut off support for groups like Hamas," Glaser said.

Some U.S. officials and lawmakers said they believe that while Saudi Arabia says it is taking steps to respond to Al Qaeda, it still supports terrorists operating in Palestinian areas in Israel.

At home, the Saudi government has battled Al Qaeda and its affiliates after car bombings and other attacks on its own people. A series of car bombings in May 2003 killed 23 people, including 12 bombers, at three complexes in Riyadh. Other attacks followed six months later, which killed at least 17 people.

Saudi government officials arrested suspected Al Qaeda fugitive Adnan Bin Abdullah Al-Omari, according to Tuesday's edition of Saudi Arabia’s state-run press agency. Al-Omari is one of the kingdom’s most wanted men.

But some U.S. lawmakers, including Sen. Jon Kyl, R-Ariz., say they want more from the Saudis to shut down terrorist financing.

“If changes are not more forthcoming than they have been, then they can fully expect policies to come from the United States Congress,” Kyl said.

Al-Faisal acknowledged that religious leaders in Saudi Arabia are fundamentalist Muslims, but denied that means they support terror.

"It is true that our senior ulama — our religious scholars — follow a fundamental school of Islam. It is true that they lead a morally conservative life. But it is also true that they condemn all suicide bombings and the taking of any innocent life," he said.

President Bush met with Saudi Arabia’s Crown Prince Abdullah last April at his Crawford, Texas, ranch. The photographs of the two holding hands, an Arab custom, led some critics to say the Bush administration has been too lenient on the Saudis.

Secretary of State Condoleezza Rice is scheduled to travel to Saudia Arabia later this week as part of her Middle East trip.

FOX News’ James Rosen and The Associated Press contributed to this report.