An international conference intended to advance democracy in the Middle East ended Saturday without a formal declaration, eliciting expressions of disappointment from U.S. officials, who considered the conference a key part of President Bush's regional democracy initiative.

In a surprise move, Egypt, which accounts for more than half the Arab world's population and is the second-largest recipient of U.S. aid, derailed the Forum for the Future by demanding language that would have given Arab governments significant control over which pro-democracy groups would receive aid from a new fund.

Last-ditch diplomacy by the United States -- which was represented at the conference by Secretary of State Condoleezza Rice -- failed to get Egypt to budge, and Egyptian Foreign Minister Ahmed Aboul Gheit left before the conference broke up. "We made a very clear case," a senior U.S. official at the conference said on condition of anonymity. "There were intensive negotiations. We made clear it would scuttle the declaration"

Participants may have to wait another year for a region-wide declaration, Bahrain's foreign minister, Khalid bin Ahmed Khalifa, said at a news conference here.

The gathering of dozens of nations -- including 22 Arab countries, members of the G-8 industrialized countries and others -- nevertheless agreed to set up two new groups to promote political and economic reform.

The U.S. delegation expressed disappointment with Egypt, a long-standing ally on such pivotal issues as the Arab-Israeli conflict and the Bush administration's international fight against terrorism. Egypt receives roughly $2 billion in U.S. military and economic assistance annually. Since it made peace with Israel more than a quarter-century ago, it has received tens of billions of dollars from the United States.

"Obviously, we're not pleased," said a second senior State Department official attending the event.

Saad Eddin Ibrahim, an Egyptian democracy activist who attended the conference, charged that the government of President Hosni Mubarak was holding the region "hostage to its despotism. By so doing," he said, "they leave the field clear for the theocrats. . . . The theocrats still have the mosque," a reference to the fact that Egypt's proposed restriction would have limited funds available to secular democracy activists and nongovernmental organizations, or NGOs.

The Forum for the Future, a joint U.S.-European initiative launched at the 2004 G-8 summit hosted by Bush at Sea Island, Ga., is an element of the administration's Broader Middle East and North Africa Initiative. With the related issue of Iraq, promoting democracy in the Islamic world is the Bush administration's top foreign policy priority. The first Forum for the Future was held last year in Morocco; this year's forum was aimed at fostering nongovernmental organizations and civil society.

The forum's final declaration would have bound countries in the Middle East and North Africa to "expand democratic practices, to enlarge participation in political and public life, to foster the roles of civil society, including NGOs, and to widen women's participation in the political, economic, social, cultural and education fields and to reinforce their rights and status in society while understanding that each country is unique."

But Egyptian officials wanted to add language stipulating that only NGOs legally registered with their governments were covered by the declaration. Although Saudi Arabia and Oman initially supported Egypt, all the governments but Egypt agreed in the end to take out language that would have given them control over foreign resources going to groups in their countries. The United States told the Egyptian delegation that the addition was inappropriate, U.S. officials said.

"In our view and in the view of other delegations, this would have circumscribed NGO activity," said the second senior U.S. official, who briefed reporters traveling with Rice.

The aid most affected by the wording of the declaration would come from one of the two new funds established Saturday, the Foundation for the Future. The foundation has commitments of over $50 million to help nongovernmental organizations, academic institutions and professional associations foster freedom and democracy in the Middle East and North Africa. The United States has pledged $35 million.

The second new fund, called the Fund for the Future, is designed to help small and medium-size enterprises to stimulate the private sector and attract foreign investment. The fund, which is expected to establish offices in Egypt and Morocco to evaluate and recommend investments, will contain about $100 million, with the Bush administration pledging $50 million.

The dispute over the forum's final declaration underscored broader differences between the West and Muslim nations of the Middle East, North Africa and South Asia.

Several Arab delegates expressed concern that the norms of democracy -- and the means of achieving it -- were being imposed by the outside world. At a dinner Friday night before Rice arrived, several delegations made clear that the Arabs want more say in crafting criteria for change, according to Arab and European officials present.

Britain, which co-sponsored the forum with Bahrain, acknowledged the issue at the news conference. "It would be a disaster for the region if this region thought democracy was an American idea," said British Foreign Secretary Jack Straw.

In her opening remarks at the conference, Rice voiced criticism of Syria and demanded it release all its political prisoners -- specifically a democracy activist, Kamal Labwani, who was arrested Tuesday after he returned from talks at the White House.

"We continue to support the Syrian people's aspirations for liberty, democracy and justice under the rule of law," Rice said, as Syrian Foreign Minister Farouk Charaa looked on.

"We would like to see an end to the arbitrary detentions of democratic and human rights activists," Rice said.

Secretary of State Condoleezza Rice, with British Foreign Secretary Jack Straw, speaks at the Forum for the Future in Bahrain.