Ehud Olmert, the Israeli Prime Minister, said yesterday that he hoped to begin talks on creating a Palestinian state soon, dropping months of resistance to holding discussions on the core issue of statehood for the West Bank and Gaza.

In his first talks in the West Bank with Mahmoud Abbas, the Palestinian President, the Israeli leader broached the thorny subject of “end-game” issues, according to Saeb Erakat, the chief Palestinian negotiator.

The two leaders met at a hotel in Jericho, just south of Jerusalem - the first time that an Israeli Prime Minister has held peace talks on Palestinian soil since before the second intifada broke out in September 2000.

Israeli officials insisted that the talks had been restricted to how both sides viewed the shape of a future Palestinian state. However, Salam Fayyad, the West Bank Prime Minister, said the two leaders discussed “how to reach an agreement on an independent Palestinian state as quickly as possible”.

Mr Olmert held out hope for the Palestinians, who have complained that the Israeli focus on modest trust-building was thwarting their hopes to move ahead with serious talks that would actually give them a political horizon.

“I came here in order to discuss with you the fundamental issues outstanding between Israel and the Palestinian Authority, hoping that this will lead us soon into negotiations about the creation of a Palestinian state,” he said.

That an Israeli leader had ventured into Palestinian land - albeit the safest of Palestinian towns, and with a heavy Israeli security presence - was regarded as symbolic of the trusting relationship that the two men are trying to forge.

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