Leading Israeli and Palestinian representatives have held a meeting in Tel Aviv at the residence of the American ambassador to Israel .

Reports say the surprise talks, involving the Israeli cabinet secretary and the chief Palestinian peace negotiator, Saeb Erekat focussed on the opening of an airport and industrial zone in the Palestinian autonomous area of the Gaza Strip.

The meeting comes amid Israeli media reports that a deal is close on a deadlocked American plan for an Israeli withdrawal from a further thirteen per cent of the West Bank.

The prime minister, Binyamin Netanyahu, played down the speculation of an imminent agreement.