Palestinian President Mahmoud Abbas has not agreed to postpone talks on the future of Jerusalem, a senior adviser said yesterday, disputing comments by Israeli Prime Minister Ehud Olmert.

Olmert said on Sunday that Abbas had consented to hold off discussing Jerusalem until the end of the negotiating process, a move that could anger Palestinians but help the Israeli leader hold together his fragile coalition government for now.

“This is not true at all,” said Nimer Hammad, Abbas’ senior political adviser. “The issue of Jerusalem is a fundamental issue and cannot be postponed. The president did not agree (with Olmert) to postpone it.”

Abbas and Olmert planned to hold talks today in Jerusalem. They have pledged to meet frequently to help advance Palestinian statehood negotiations that resumed after a US-hosted Middle East peace conference in November.

The two sides, urged by US President George W. Bush to reach a peace agreement before he leaves office in January 2009, have agreed to address core issues such as borders and the future of Jerusalem and Palestinian refugees.

But in a speech on Sunday, Olmert said the goal of peace talks with Abbas was to reach an understanding on “basic principles” for a Palestinian state by the end of 2008, rather than a full-fledged agreement.

“I don’t know if we will be able to reach an understanding with the Palestinians. I hope we will. We’ll do everything in our power to. But we will not start with the issue which is the most difficult,” Olmert said of Jerusalem.

“We will postpone dealing with Jerusalem to the last phase of the negotiations,” Olmert said, stressing that Abbas had “accepted” his suggestion.

Israel considers Arab East Jerusalem, which it captured in 1967 and later annexed in a move that was never recognized internationally, as its “indivisible and eternal capital”.

Palestinians want East Jerusalem to be the capital of the state they aspire to establish in the occupied West Bank and in the Gaza Strip.

Abbas’ Fatah faction holds sway only the West Bank, after losing control of the Gaza Strip to Hamas in fighting in June.

Olmert’s government has already lost one of its right-wing coalition partners over the peace talks. The ultra-religious Shas party has also threatened to bolt if the negotiations focus on Jerusalem.