By Inal Ersan

DUBAI, Dec 29 (Reuters) - Al Qaeda leader Osama bin Laden accused Washington of plotting to take control of Iraq's oil and urged Iraqis to reject efforts to rebuild a U.S.-backed national unity government there.

The militant leader also vowed in a recording posted on an Islamist Web site on Saturday to expand jihad to liberate all Palestinian land "from the (Mediterranean) sea to the (Jordan) river" and said his group will never recognise Israel.

"America seeks, alongside its agents in the region, to create an allied government ... that would accept in advance the presence of major U.S. bases in Iraq and give the Americans all they wish of Iraq's oil," he said in the 56-minute recording.

The Saudi-born militant said the envisaged Iraqi government was also meant to help Washington "fully dominate" the region with help from allies such as Saudi Arabia.

"The government of Riyadh is still playing its wicked roles," he said, describing Saudi Arabia's King Abdullah as the United States' "chief agent".

Referring to a Saudi push in February to help Palestinian rivals agree a unity government which fell apart in June, he said Riyadh was part of a scheme to lure Islamist Palestinian militant group Hamas away from its jihadist roots.

"I assure our kin in Palestine especially that we shall expand our jihad ... We will not recognise a state for the Jews over even an inch of Palestinian soil," said bin Laden.

Bin Laden did not mention accusations al Qaeda was behind Thursday's assassination of Pakistani opposition leader Benazir Bhutto. A Qaeda-allied militant leader has denied involvement.