Israeli Prime Minister Benjamin Netanyahu yesterday said his government was making progress towards reopening peace talks with the Palestinians and hoped to be able to do so shortly.

Israel has resisted US President Barack Obama's calls to freeze settlement building in occupied territory so that peace talks may resume, a dispute that has led to a rare rift in the Jewish state's relations with its main backer.

Mr Netanyahu held talks in London with US Middle East envoy George Mitchell yesterday morning, a meeting described as "very productive" by the two men.

"They agreed on the importance of restarting meaningful negotiations between Israelis and Palestinians and working toward a comprehensive peace, and that all sides need to take concrete steps toward peace," they said in a joint statement issued by the US State Department.

"The Prime Minister and the Senator made good progress today, and an Israeli delegation will meet Senator Mitchell next week in the United States to continue the conversation".

Senator Mitchell would visit Israel next month as well, Mr Netanyahu said.

Israeli spokesman Mark Regev suggested in remarks to reporters in London that an agreement with Washington which would allow peace talks to resume could come within weeks.

"The goal is to find common ground with the American Administration... on a framework that will allow the restarting of an energised peace process," Mr Regev said. "For that process to be meaningful, the Arab world has to be part of it," he added.

Officials have said that progress in the talks with Mr Mitchell may lead to a meeting between Mr Netanyahu and Palestinian President Mahmoud Abbas on the sidelines of the United Nations General Assembly next month.

The two have not met since Mr Netanyahu, a right-wing leader, took office in March. Mr Abbas has so far conditioned holding any talks with Israel, stalled since December, on a freeze in construction in Jewish settlements.

Mr Netanyahu, briefing reporters after flying to Berlin from London for talks today with Chancellor Angela Merkel, said if Mr Abbas wanted to meet "he is welcome. We have thought for a long time there was room for us to meet."

Mr Netanyahu would not say whether Israel had agreed to any hiatus in construction in the settlements. He said "a certain degree of progress was made but there is still work to do."

He has pledged not to build any new Israeli settlements but wants to enable what he calls "natural growth" of existing enclaves.

About half a million Israelis live in settlements built in the West Bank and East Jerusalem in territory captured by Israeli forces in the 1967 Middle East War.

The international community considers the settlements to be illegal and Palestinians say they undermine their aspirations for their own state on the land.

Mr Netanyahu insisted he would continue demanding that Palestinians recognise Israel as a Jewish state.

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