Israeli PM Ehud Olmert wants to meet Palestinian President Mahmoud Abbas as soon as possible after militants release a captured Israeli soldier.
Olmert and Abbas met at an informal meeting in Jordan in June
Vice-Prime Minister Shimon Peres announced the proposed meeting.
He said Israel wanted to resume talks with Mr Abbas on the basis of the peace plan known as the roadmap.
Separately, Mr Abbas said that agreement had been reached on swapping the captured Israeli soldier, Gilad Shalit, for Palestinian prisoners.
The capture of the Israeli soldier by Palestinian militants in a cross-border raid in June sparked a major Israeli offensive in the Gaza Strip during which more than 200 Palestinians died.
Reports in the Arab media have said a prisoner exchange is imminent after mediation by Egypt.
"An agreement has been reached about exchanging prisoners that is based on Egypt taking the soldier as a deposit, and after that the number of Palestinian prisoners of war would be announced," Mr Abbas told the Bahraini Akhbar al-Khaleej newspaper.
The roadmap was drafted by the European Union, Russia, the UN and the US. It outlines steps and a timetable toward establishing a viable Palestinian state living in peace alongside Israel.
It has effectively been superseded by Israel's unilateral withdrawal of troops and settlers from Gaza a year ago, and Mr Olmert's plans to re-deploy in the West Bank, withdrawing from some settlements, but holding on the main settlement bocks.
Relations between Israel and the Palestinians further deteriorated with the victory of the militant group Hamas in elections in January.
But Mr Peres told Israeli Army radio: "Abu Mazen (Mr Abbas) should be invited to talks, and I believe the prime minister will do so in the coming days.
"Negotiations must be launched on the basis of the roadmap When this (captive) situation is resolved, a meeting will take place."
The Israeli and Palestinian leaders have only met once since Mr Olmert became prime minister, informally at a conference in Jordan.
On Monday, UN Secretary General Kofi Annan said Israel and Hezbollah had accepted his offer to mediate in the dispute over two other captured Israeli soldiers.
Hezbollah has called for an exchange of prisoners with Israel.
Hezbollah seized the soldiers during a cross-border raid in July, triggering the recent devastating conflict.