Israeli Prime Minister, Ehud Olmert, said Sunday he would propose direct peace talks with regional states on the basis of the Saudi peace proposal of 2002 Arab states' summit.

Olmert’s remarks came during a weekly cabinet session ahead of the Olmert-Abbas meeting in Jerusalem, taking place later in the day.

Olmert told his ministers that he also intends to hold meetings with Palestinian President Mahmoud Abbas in the occupied West Bank, not only in Israel.

The Arab peace proposal, initiated by Saudi Arabia in 2002, called for reciprocal recognition and normal relations between Arab states and Israel in return for complete Israeli withdrawal from the occupied Arab lands that Israel took over during the six-day Israeli-Arab war in June 1967.

The peace proposal also called for a fair solution to the Palestinian refugee problem and establishment of a Palestinian state with east Jerusalem as its capital. Israel had earlier played down the proposal and called for amending it, claiming that the status quo is unfitting.

Later this month Arab states will review the Saudi peace proposal of 2002 during an Arab states summit meeting in Saudi Arabia. Palestinian President Mahmoud Abbas and Israeli Prime Minister, Ehud Olmert, are meeting Sunday in west Jerusalem for the second round of talks in a month, to discuss humanitarian concerns.

President Abbas is expected to urge the Israeli Prime Minister not to boycott the upcoming Palestinian collation government, given the fact that peace negotiations are ‘solely the responsibility of Palestine Liberation Organization headed by Abbas’.

Olmert, from his part, is likely to reiterate Israel’s position that any government should recognize Israel, renounce violence and accept signed agreements with Israel. Yet, Israel had declared earlier that it would not boycott Fatah ministers it considers 'moderate'.

The Abbas-Olmert meeting is the second in a month after both leaders, jointly with U.S Secretary of State Condoleezza Rice, held a trilateral summit on February 19th, which produced no concrete results.