Ehud Olmert, the new Israeli Prime Minister, said on a visit to London today that he wanted to find a negotiated solution to the Middle East conflict but warned Palestinians that his Government would act unilaterally if it had to.

Mr Olmert was speaking at a Downing Street press conference after talks with Tony Blair that focused on efforts to revive the peace process stalled since the victory of Hamas in Palestinian elections. The visit has been overshadowed by the renewed bloodshed in Gaza, which prompted Hamas to break its 15-month ceasefire.

Mr Blair told the press conference that the principles necessary for peace were very clear: that all parties should renounce violence and work on the basis of the internationally agreed "roadmap" towards the creation of a viable Palestinian state that would co-exist with its Israeli neighbour.

Mr Blair said: "I think the thing everybody finds frustrating and difficult is that there is now agreement in the international community that there should be a two-state solution. There’s agreement that the only way forward is to negotiate on the basis of the renunciation of violence and the acceptance of democracy and there is also the fairly clear idea of what such a final status settlement would look like.

He added: "This thing either moves forward by way of agreement or other ways of moving it forward have got to be found. But I want it to move forward by agreement and so does the Prime Minister (Mr Olmert)."

Mr Olmert also spoke out for a negotiated deal, but added that Israel would act unilaterally if the Palestinian Authority did not become part of the talks by Hamas renouncing violence and accepting the state of Israel.

"One thing will not happen - stalemate," he said. "So either we move in this direction or there will be another reality and this reality is moving forward in order to change the present status quo in the Middle East.

"We want to separate from the Palestinians. We are prepared to move out from the territories.We can do it in a negotiated way, we prefer to do it in a negotiated way, we will make every possible effort in this way."

But, due to circumstances beyond Israel's control, that was no possible, he said, "there is another way and we will move forward in this way".

Mr Olmert refused to rule out any form of action by the Jewish state - including the targeted killing of Hamas ministers.

Speaking to journalists in London accompanying him on his first European visit since taking office, Olmert said:"Whoever is implicated in terrorism cannot claim to have immunity."

He added:"I do not think it would be wise of me to be more specific."

The stakes were raised over the weekend when the military wing of Hamas announced an end to its 15-month ceasefire, prompted by the deaths of eight civilians, apparently killed by an Israeli artillery shell as they ate a picnic on a Gaza beach.

Palestinians were incensed by the deaths after seeing emotive pictures of young Huda Ghalia wailing over her father’s body. Her mother and siblings were also killed.

Israel’s military halted all artillery firing into Gaza but, while Mr Olmert expressed his condolences and promised an investigation, his Government held open the possibility that the explosions could have been caused by Palestinian fire.

"Our expression of sorrow is not a suggestion of responsibility," Lieutenant-General Dan Halutz, the Chief of Staff, said.

Hamas immediately resumed firing its home-made Qassam rockets into Israeli border communities and threatened an "earthquake in the Zionist towns".

The rockets critically wounded one Israeli in Sderot, which prompted Israeli helicopter gunships to kill two Hamas militants suspected of launching the rockets.

Speaking before the meeting, British officials said that Mr Blair would raise the issue of the shelling with Mr Olmert. Margaret Beckett, who issued a statement saying that she was "deeply concerned", said that she would also pursue the matter with Tzipi Livni, the Israeli Foreign Minister.

British officials say that the Israeli delegation would also be questioned about the death of two Britons, the cameraman James Miller and the student Tom Hurndall, for whom inquest juries returned verdicts of unlawful killing after both were shot by Israeli soldiers in 2003. Israeli officials say that they are intent on furthering a mood of "co-ordination and co-operation" with London and other European capitals.

"Britain is very important. It is a major component of the axis of the counterterrorism campaign which the United States is leading," Ranaan Gissin, a senior aide to Mr Olmert, said. The aim of the trip, he said, was to "try to revive the peace process in accordance with [President Bush’s] ‘roadmap’ ".

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