The Israeli and Palestinian prime ministers will meet later this month, officials said on Wednesday, but the rare talks may only sharpen differences that have brought peace negotiations to a standstill.
The Palestinians said they will present Benjamin Netanyahu with a letter spelling out Israel's failure to implement a 2003 road map that includes a halt to settlement activity as a step towards achieving a final peace agreement.
The real test in front of Netanyahu is to stop the settlements, after which he will find that we are ready for negotiations, Mohammed Shtayyeh, a member of the Palestinian negotiating team, told Reuters.
These aren't conditions, but what we want him to say is that he's ready to end the occupation, he said.
An Israeli official said Netanyahu would reiterate, at the meeting with Palestinian Prime Minister Salam Fayyad, his call for peace talks to get under way without any preconditions.
U.S.-hosted peace negotiations froze in late 2010 after Netanyahu rejected Palestinian demands that he extend the 10-month partial construction freeze he had imposed at Washington's behest to coax them into talks.
The official said Netanyahu would also repeat his demand that Palestinians recognise Israel as a Jewish state in any peace agreement - something they oppose.
Fayyad will become the highest-level Palestinian official to have met Netanyahu since the negotiations broke off.
But the talks, which officials on both sides said would be held after the Jewish holiday of Passover, ending on April 14, will not be attended by Palestinian President Mahmoud Abbas.
Nabil Shaath, a senior official in Abbas's Fatah movement, said Israel had pushed on with settlement building and rejected negotiations for a Palestinian state based on the lines that existed before Israel captured the West Bank in 1967.
The Palestinians, on the other hand, have done all our duties of keeping security and better governance, Shaath said in English.
This situation cannot lead us to a peace process, he said. The consequence of this letter is to put Mr Netanyahu on the spot. He has now to answer.
ISRAEL PLANS 1,000 MORE SETTLER HOMES
An Israeli settlement watchdog said tenders had been issued to build more than 1,000 new settler homes, mostly in parts of East Jerusalem that Israel annexed as part of its capital in a move never recognised internationally.
More than 800 are planned for an area called Har Homa, whose expansion would effectively block off East Jerusalem, which the Palestinians want as their future capital, from the Palestinian city of Bethlehem in the West Bank, said Lior Amihai, spokesman for the Peace Now group.
Netanyahu has said the pre-1967 borders are indefensible for Israel and that the future of settlements, which Palestinians fear could deny them a viable state, should be decided in negotiations.
I want to resolve the conflict with the Palestinians because I do not want a bi-national state, Netanyahu told a news conference on Tuesday.
Ensuring the existence of a Jewish state is not just a matter of separation, it is also a matter of security, defence and keeping our vital, national interests, he said.
This requires negotiations, but there is no way to conclude negotiations if you don't start negotiations. Until this moment the Palestinians, not us, have chosen not to negotiate and I hope they change their minds in the coming months.
Some 500,000 Israelis live in the West Bank and East Jerusalem, which are home to 2.5 million Palestinians.
Most world powers deem the Jewish settlements illegal. Israel, which cites historical and biblical links to those areas, disputes this and has said it will keep major settlement blocs under any eventual peace accord.
(Additional reporting by Ali Sawafta and Noah Browning in Ramallah and Allyn Fisher-Ilan and Ori Lewis in Jerusalem; Editing by Kevin Liffey)