The talks involving the Israeli Cabinet Secretary Danny Naveh and the chief Palestinian negotiator Saeb Erekat are reported to have focused on plans for an airport and industrial zone in the Palestinian-controlled Gaza Strip.

The projects have been held up by disputes between the two sides over the details.

However, the meeting comes amid speculation in the Israeli media that a deal might finally be at hand on an American plan for a further Israeli withdrawal from the West Bank.

Under the terms of the Oslo accords with the Palestinians, Israel is meant to make a series of withdrawals from territory in the West Bank in return for security guarantees from the Palestinian side.

However, there is deadlock over the scope of the withdrawals, with the Israelis unwilling to give up a further 13% of the West Bank as proposed by the Americans.

The Palestinians have said they will accept the US proposals.

The Prime Minister, Binyamin Netanyahu, has played down speculation that a solution to the impasse might be imminent.