Palestinian and Israeli leaders have pledged to press on with peace talks despite a continuing row about Jewish settlement activity.

Mahmoud Abbas urged Ehud Olmert to stop building homes for Jews in occupied East Jerusalem, officials said.

Israel has said the hundreds of new homes in the Har Homa settlement are within existing boundaries.

Follow-up peace efforts since the US-sponsored Annapolis summit last month have been paralysed by the issue.

The Palestinians have accused the Israelis of trying to torpedo a peace deal and are calling for a total freeze on settlement building in the West Bank and East Jerusalem, which they hope to make their future capital.

Israel occupied East Jerusalem during the 1967 war and annexed it shortly afterwards, in a move that has not been recognised internationally.

'Positive'

There were no official statements after the two-hour meeting at Mr Olmert's official residence, and there are conflicting reports about Mr Olmert's response about settlement building.

"Both parties agreed not to take any steps that may pre-empt or prejudice the issues reserved for the permanent status negotiations," Palestinian negotiator Saeb Erakat said.

He added that these issues included Jerusalem, settlements, borders, water, refugees and security.

Both sides described the meeting as "positive".

"Beginning next week, the final status negotiations will be resumed," said top Palestinian negotiator Ahmed Qurei.

But Mr Erakat stressed the need to stop all settlement activities in order to facilitate the talks on a final peace accord and reported no progress on narrowing the gaps between the two sides.

Mr Olmert's spokesman Mark Regev said the two sides decided on "serious talks on all the sensitive issues", but added that "we won't agree with the Palestinians on every issue on day one".

Differences

Separately, at least six Palestinian militants - one of them a senior commander - were killed in new Israeli raids in the southern Gaza Strip.

Up to 11 other people were wounded in attacks near Khan Younis.

The radical group Islamic Jihad named the dead leader as Mohammed Abdullah.

Israel has pledged to end rocket fire from the Palestinian territory, controlled by the militant Hamas organisation in defiance of Mr Abbas's Fatah faction.

During the meeting, Mr Olmert pressed the Palestinians to meet their own road map commitments to rein in militants in the West Bank and the Gaza Strip, officials said.

It was the first meeting between Mr Olmert and Mr Abbas since the Annapolis summit.

Both sides had said they hoped to get the negotiations back on track.

Correspondents say it is unclear how Mr Abbas and Mr Olmert can bridge their differences and jumpstart talks ahead of US President George W Bush's first presidential visit to Israel and the occupied territories next month.

At Annapolis they pledged to work all-out for a final peace deal before the end of 2008.