Israel has lifted a ban on contacts with new Palestinian leader Mahmoud Abbas, imposed last week after a suicide attack in the Gaza Strip.
Ariel Sharon says Mahmoud Abbas must produce results
Israeli Army Radio said the decision was taken at a meeting of Prime Minister Ariel Sharon's inner cabinet.
Security officials from the two sides met later at a checkpoint between northern Gaza and Israel.
According to the Israeli government, the field commanders discussed the co-ordination of border security.
Call for calm
The talks - involving a senior Israeli army commander and the Palestinian public security director - were held at the Erez crossing, the Associated Press news agency reported.
They aimed at finding a way of stopping Palestinian militants firing rockets at southern Israel.
Israeli media reports said the Palestinians presented a plan to deploy security forces along the border to prevent attacks on Israeli positions.
A senior Israeli general is said to have warned the Palestinian side that his troops would be sent into Gaza in force, if the Palestinian authorities did not rein in militant groups.
Earlier on Wednesday, a Palestinian security commander in Gaza said security units would fan out near the territory's borders over the next two days to enforce Mr Abbas' call for calm.
Mr Abbas was in Gaza for a second day on Wednesday, trying to negotiate a truce with Palestinian militant groups.
The BBC's Barbara Plett in Jerusalem says Israel's decision to re-open links is apparently meant to give Mr Abbas more of a chance to coax the militants into a deal.
But violence continued on Wednesday.
- The Israeli army said it shot dead two Palestinian militants as they crawled towards the Gaza-Israel border fence
- Two Israeli soldiers were injured when militants fired a missile at their vehicle near the border
- Two mortars were fired into a Jewish settlement; there were no injuries
- Overnight, Israeli troops arrested 13 Hamas militants during a raid in the West Bank city of Nablus, the army said.
'Nothing for free'
Militants have so far said they will only call off attacks if Israel does the same.
"We are going to listen to [Mr Abbas] regarding all the items, including the ceasefire," said Mohammed al-Hindi, a leader of Islamic Jihad, before the group met the Palestinian leader on Wednesday.
But he added: "Nothing can be given for free."
Israel's cabinet, meanwhile, is said to have approved, in principle, a sweeping army operation in Gaza if Mr Abbas fails to persuade militants to cease attacks.