Efforts to revive the Middle East peace process took another blow yesterday after Palestinian President Mahmud Abbas accused settlers of torching a West Bank mosque as a US envoy arrived in the region.

The flare-up occurred just hours after George Mitchell arrived in Israel to finalise preparations for a new round of peace talks between Israel and the Palestinians that were called off two months ago due to a bitter row over settlement building.

The US envoy's return came as both sides were poised to start "proximity talks" - indirect negotiations aimed at kick-starting the peace process which broke down 18 months ago.

The mosque, located in the northern West Bank town of Lubban ash-Sharqiya, went up in flames in the early hours of yesterday morning in an attack blamed on radical Jewish settlers in the area.

"President Abbas condemns the burning of the mosque in Lubban ash-Sharqiya by extremist settlers and said the responsibility for this criminal attack lies with the Israeli government because the Israeli army protects the settlers," his office said.

"This criminal attack threatens efforts to revive the peace process."

But Israeli investigators said they were looking into the possibility that the blaze may have been caused by a short circuit.

Mr Mitchell's arrival had been widely expected to herald the launch of the proximity talks, ahead of which there has been a flurry of top-level diplomacy.

On Monday, Israeli Prime Minister Benjamin Netanyahu met Egyptian President Hosni Mubarak in the Red Sea resort of Sharm el-Sheikh for talks focused on the resumption of indirect talks.

And later in the day, US President Barack Obama telephoned the Israeli leader to personally hammer home the urgent need for fresh talks.

During their 20-minute conversation, Mr Obama pressed the importance of "substantive" proximity talks between the two sides, and on the need for direct contacts to start soon, White House spokesman Robert Gibbs said.

Mr Mitchell is due to meet Mr Netanyahu today and Mr Abbas on Friday in the hope of getting the two sides to begin indirect talks. Direct negotiations were halted 18 months ago when Israel launched a devastating 22-day military offensive in the Gaza Strip.

The Palestinians had agreed in March to take part in the proximity talks but pulled out after Israel announced plans to build 1,600 homes in annexed Arab east Jerusalem.

The deeply controversial move angered Washington and came as US Vice President Joe Biden was in the region to promote the negotiations.