(Changes sourcing to Saudi minister of state, adds quotes, TV)

By Aziz El Yaakoubi

JEDDAH, Saudi Arabia, July 16 (Reuters) - Crown Prince Mohammed bin Salman told President Joe Biden that Saudi Arabia had acted to prevent a repeat of mistakes like the killing of journalist Jamal Khashoggi and that the United States had also made mistakes, including in Iraq, a Saudi minister said.

Biden said on Friday he told Prince Mohammed he held him responsible for the 2018 murder of Washington Post journalist Khashoggi at the Saudi consulate in Istanbul, shortly after exchanging a fist bump with the kingdom's de facto ruler.

"The President raised the issue... And the crown prince responded that this was a painful episode for Saudi Arabia and that it was a terrible mistake," the kingdom's Minister of State for Foreign Affairs Adel al-Jubeir said.

Those who were accused were brought to trial and being punished with prison terms, he said.

U.S. intelligence agencies believe the crown prince ordered Khashoggi's killing, which he denies.

Jubeir, talking to Reuters about Friday's conversation between the two leaders, said the crown prince had made the case that trying to impose values by force on other countries could backfire.

"It has not worked when the U.S. tried to impose values on Afghanistan and Iraq. In fact, it backfired. It does not work when people try to impose values by force on other countries," Jubeir quoted the prince, known as MbS, as telling Biden.

"Countries have different values and those values should be respected," MbS told Biden.

The exchange highlighted the tensions that have weighed on the relationship between Washington and Riyadh, its closest Arab ally, over several issues, including Khashoggi, high oil prices and the Yemen war.

Biden, who landed in Saudi Arabia on Friday in his first Middle East trip as president, held a summit on Saturday with six Gulf states and Egypt, Jordan and Iraq while downplaying his meeting with Prince Mohammed. That encounter has drawn criticism at home over human rights abuses.

Biden had promised to make Saudi Arabia a "pariah" on the global stage over the 2018 murder of Khashoggi, but ultimately decided U.S. interests dictated improving relations with the world's top oil exporter and Arab powerhouse.

After the summit, the leaders gathered for a group picture at which Biden kept his distance from Prince Mohammed.

"His Royal Highness mentioned to the President that mistakes like this happen in other countries and we saw a mistake like this being committed by the United States in Abu Ghraib (prison in Iraq)," Jubeir said.