WASHINGTON, Aug 6 (Reuters) - A majority of people in the Arab world now hold a negative view of President Barack Obama and the United States in a substantial change from how he was seen at the start of his presidency, according to a public opinion poll released on Thursday.

Sixty-two percent hold a dim view of Obama and the United States compared with 20 percent who view them in a positive light, according to the 2010 Arab Public Opinion Poll released by Washington-based think tank The Brookings Institution.

In a survey early in his presidency, only 23 percent of respondents in six countries expressed a negative view of Obama and the United States, while 45 percent were positive about the new administration, which took office in January 2009.

In the latest poll, 63 percent said they were discouraged by Obama's Middle East policy and 16 percent said they were hopeful.

The findings also marked a reversal from the previous year, when more than half were optimistic about US Middle East policy and only 15 percent were discouraged.

A majority (61 percent) of the nearly 4,000 people in Egypt, Jordan, Lebanon, Morocco, Saudi Arabia, and United Arab Emirates said they were most disappointed with Obama's policies on the Israeli-Palestinian conflict.

Iraq was the second most disappointing issue, but it was a distant second with a mere 27 percent of respondents calling it a top priority.

More than half of those polled (54 percent) said an Israeli-Palestinian peace agreement would improve their views of the United States the most.

In last year's survey, half the respondents said withdrawing troops from Iraq was the number-one thing the United States could do to improve its image in the Arab world.

Among other findings, a majority of the Arab public now see a nuclear-armed Iran as being better for the Middle East.

Fifty-seven percent believe Iran is trying to develop nuclear weapons, about the same as in 2009 but up from 39 percent in 2008.

Fifty-seven percent said that if Iran acquires nuclear weapons the likely outcome would be more positive for the Middle East, compared with 21 percent who say it would be a more negative development.

Last year, only 29 percent thought a nuclear-armed Iran would be good for the region, while 46 percent said the likely outcome would be more negative.

The poll of 3,976 people was conducted June 29-July 20, by the University of Maryland and Zogby International. The margin of error is plus or minus 1.6 percentage points.