Ehud Olmert, the Israeli Prime Minister, has agreed to meet the Palestinian President Mahmoud Abbas every two weeks, but has rebuffed American pressure to talk about the shape of a future Palestinian state.

Mr Olmert apparently rejected a US offer to supervise the talks, insisting that he would not recognise the new Palestinian unity government.

Condoleezza Rice, the US Secretary of State, left Jerusalem yesterday after four days of shuttle diplomacy, having fallen short of her goals.

She had hoped for commitments from both sides to discuss “final status” solutions — the details of what a Palestinian state might look like — but she conceded that there would be no negotiations on the borders of a possible Palestinian state, the status of Jerusalem, or the rights of Palestinian refugees to return to Israel at the fortnightly meetings.

Mr Olmert and Mr Abbas would instead focus on freedom of movement for Palestinians and stabilising a ceasefire. “We are not yet at final status negotiations,” Dr Rice said. “Palestinians must know that their state will be viable; Israelis must know that a future state of Palestine will be a source of security, not a threat.”

Dr Rice’s willingness to act as a go-between was regarded as a policy shift for the Bush Administration, which had refrained from imposing an American-made solution on the stalled peace process. Her initiative was interpreted mainly as an effort to win Washington support from moderate Arab countries. But Dr Rice encountered strong resistance from Mr Olmert, who reportedly rejected her offer to supervise negotiations with the Palestinians because he doubted Mr Abbas’s credibility.

Mr Olmert also bypassed Washington in delivering a message to Saudi Arabia that he would be open to discussing the 2002 Arab Peace Initiative, which calls for Israel to withdraw to its 1967 borders and a “just solution” for Palestinian refugees in exchange for normalized relations with moderate Arab States.

Mr Olmert asked Ban Ki-Moon, the UN Secretary-General, to tell King Abdullah that the proposal was “good and challenging” and could serve as a basis for future dialogue.

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