Israel and the Palestinians held their first formal peace talks for six years today, although the meeting got off to a shaky start with Palestinian officials expressing outrage at Israel’s announcement of new settlements in East Jerusalem.

The new round of talks, designed to capitalise on the regional summit in the US city of Annapolis two weeks ago, came a day after Israel sent dozens of tanks into Gaza to hunt down wanted militants, triggering intense battles that left at least seven Palestinian militants dead.

Talks lasted for 90 minutes before a Palestinian negotiator emerged to claim that the settlement issue would have to be resolved before further negotiations could continue.

“We demanded a complete halt to the settlement building ...We have agreed to meet again, nothing else,” Palestinian negotiator Yasser Abed Rabbo told Reuters after the meeting in Jerusalem ended.

Violence continued this morning with Palestinian militants firing 16 homemade rockets into Israel injuring one woman. The rocket attacks were launched within hours of Israeli forces ending their incursion into Gaza.

After a day of conflict it was announced last night that today’s talks had been moved away from Jerusalem’s ornate King David Hotel to an undisclosed location

Some Palestinian officials had called for a boycott of the talks in protest at Israel’s decision to build more than 300 new homes in Ha Homa, an area of East Jerusalem captured by the Jewish state in the 1967 war.

Israel pledged to freeze settlement building at Annapolis, and the new development project has caused uproar, including a rare reprimand for Israel from the United States.

At a meeting in Ankara of Israel’s two closest allies in the Muslim world, Turkey and Jordan, Abdullah Gul, the Turkish president, said the settlement expansion plans had “shocked the whole world... The Israeli leadership must correct this.” And Prince Saud al-Faisal, the foreign minister of Saudi Arabia, which lent its diplomatic weight to the regional summit, warned that the move “contradicts the bases and principles of the Annapolis peace conference.”

The Palestinians fear the new housing construction will cut East Jerusalem off from the West Bank and complicate the fresh talks that are due to focus on core issues, such as borders, the status of Jerusalem and the return of Palestinian refugees.

The first task of the steering committee meeting today was intended to ne mainly logistical, deciding how many committees will be set up to carry out the peace talks as well as how often and where the teams will meet.

The peace talks have been ambitiously scheduled for conclusion by December 2008, near the end of President Bush’s tenure in the White House.

Arye Mekel, an Israeli Foreign Ministry spokesman, said both sides wanted to keep the early meetings low key. He said the talks would mostly be procedural, but that there also were hopes to “jump start” the overall peace process.

The talks were staged between Israel and the Palestinian administration of Mahmoud Abbas which rules the West Bank.

Both leaders face domestic troubles, making it tough for them to offer concessions. Israeli hawks are determined to bring down a peacemaking government, and Mr Abbas now controls only the West Bank, having lost control of the Gaza Strip to the radical Islamist group Hamas.

In Gaza, the atmosphere yesterday was far closer to war than peace, as the Israeli army staged one of its largest incursions in months.

About 30 tanks and armoured vehicles pushed deep into the narrow coastal territory, residents said, triggering intense fighting in which

Israel called in at east two air strikes on Palestinian fighters trying to approach army positions.

Four members of Islamic Jihad, one of the most fanatical of Palestinian factions which regularly fires rockets at Israeli towns, were killed when a missile hit the house where they were sheltering. At least 20 people were wounded in the fighting, including four Israeli soldiers who sustained slight injuries when their armoured vehicle was hit by a rocket-propelled grenade.

An Israeli air strike also killed a Palestinian man who was trying to launch a rocket into Israel.

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