Prime Minister Ariel Sharon called Mahmoud Abbas on Tuesday to congratulate him for his landslide victory in an election to replace Yasser Arafat, signaling Israel's readiness to work with the new Palestinian team after years of boycotting Arafat.
Both sides said a meeting will take place, but no date was set.
Abbas' election victory on Sunday and Sharon's success this week in putting together a government that favors his plan to pull out of Gaza and part of the West Bank this summer have raised hope the two leaders can break through layers of mistrust built up over four years of violence.
However, both sides face internal problems. Palestinian national security adviser Jibril Rajoub resigned, and critics in Sharon's own Likud Party complained that his new government cannot survive without support from doves and Arab parties _ their bitter rivals.
Sharon congratulated Abbas "on his personal achievement and his victory in the elections and wished him luck," said a statement from Sharon's office, adding, "They agreed they would continue talking in the near future."
Sharon and Abbas last met in August 2003, during Abbas' brief term as Arafat's prime minister. Abbas resigned shortly afterward, blaming Arafat for refusing to hand over authority and Israel for failing to accept his demands to ease restrictions and release Palestinian prisoners.
Israel refused to negotiate with Arafat, accusing him of encouraging attacks against Israelis. The last meeting Arafat had with an Israeli prime minister was in 2000.
Abbas, widely considered more moderate than Arafat, has spoken out against violence, calling attacks against Israel a mistake.
Israel's first demand of the new Palestinian leadership is to make an effort to stop the violence, a precondition for peace talks.
Israel has had security control over all West Bank cities since launching a large offensive in April 2002 in response to a suicide bombing that killed 29 people.
Abbas has refused to order a crackdown on the violent groups, saying he wants to negotiate a cease-fire instead. During his election campaign, he embraced armed militants and pledged that the fugitives wanted by Israel would be allowed to live as free men.
The Hamas and Islamic Jihad militant groups have said they are ready to work with Abbas but are resisting his calls for a cease-fire.
Both the Israeli government and the Palestinian leadership say they are committed to the U.S.-backed "road map" plan leading to a Palestinian state.
The plan requires the Palestinians to crack down on militants who have staged numerous suicide bombings and calls on Israel to freeze settlement activity on lands envisioned as part of a future Palestinian state.
Israel has removed a few illegal settlement outposts, but dozens remain, and construction inside older settlements continues.
Israeli military planners have asked authorities for permission to destroy up to 3,000 Palestinian homes in the southern Gaza Strip to dig a trench meant to halt weapons smuggling across the Egyptian border, officials said Tuesday.
The Associated Press quoted the unnamed officials, who said they have presented three plans for constructing the trench on the so-called Philadelphi route, a volatile access road near the Rafah refugee camp on the Gaza-Egypt border.
The project, if approved by Attorney General Meni Mazuz, would destroy 200 to 3,000 homes, depending on the width of the trench, they said.
Yaakov Galanti, a spokesman for the Israeli Justice Ministry, said legal authorities were in talks with defense officials over the project as well as other alternatives for halting the smuggling. He declined to confirm the specifics of the various proposals. He said the discussions have been going on for months and would continue for several more weeks.
But Palestinian Cabinet minister Saeb Erekat condemned the idea, calling it "a catastrophe and a disaster for the Palestinian people."