RAMALLAH, West Bank, Oct 14 (Reuters) - In comments that may stir Israel's election campaign, Palestinian President Mahmoud Abbas said on Sunday that he and Ehud Olmert were "two months" away from a peace deal before Olmert had to resign as Israeli prime minister.

With Olmert lately cleared of several graft charges and considering a challenge to Prime Minister Benjamin Netanyahu at the Jan. 22 parliamentary election, supporters have highlighted Olmert's efforts to make peace with Abbas in negotiations which later foundered under Netanyahu's right-wing coalition.

Speaking to Israeli politicians in the West Bank, Abbas said: "I worked hard with Olmert. Unfortunately, he suddenly retired. We discussed the borders, the exchange of territories and traded maps. We were close and reached many understandings."

Asked how close the pair were to a deal in 2008, Abbas replied in English: "I'm sure if he continued, two months."

Olmert and other officials involved in those U.S.-sponsored talks have spoken of progress in, for example, pencilling new borders to divide Israel from a new Palestinian state, both Abbas and Olmert would have struggled to convince hardliners on either side to support any peace plan they might have produced.

Olmert was once a member of Netanyahu's Likud party but joined the centrist movement Kadima, which he led in government from 2006. In mid-2008, he announced his resignation over corruption allegations, though he remained caretaker premier until Netanyahu won a parliamentary election in early 2009.

Before Olmert left office, Abbas had suspended talks over the war Olmert launched in the Gaza Strip in late 2008, as part of Israel's confrontation with Abbas's Palestinian rivals Hamas.

Aides to Olmert, 67, have said he has been considering returning to active politics since he was largely acquitted in July of charges against him and received a suspended jail term that did not raise a legal obstacle for him to run for election.

Abbas stopped short of endorsing Olmert, describing the vote as an "internal Israeli issue".

The Palestinians want to establish a state in the West Bank and Gaza Strip with its capital in Jerusalem.

Netanyahu called the election several months early and polls make him strong favourite to retain power. (Reporting by Ali Sawafta; Writing by Maayan Lubell; Editing by Alastair Macdonald)