Israeli Prime Minister Ehud Olmert is scheduled to meet Palestinian National Authority Chairman Mahmoud Abbas on Thursday, in a bid to solve the crisis of settlement construction, local daily Ha'aretz reported on Wednesday.

The two leaders will meet on Thursday for the first time since the Annapolis peace summit last month, in an effort to undo a snag in Israeli-Palestinian negotiations over Israeli plans to expand an East Jerusalem settlement, Olmert's office said.

A second round of peace talks between the Israeli and Palestinian negotiation teams concluded on Monday without yielding results or progress. Palestinians insisted that Israel stop settlement expansion, while Israelis demand that the Palestinians implement reforms in security mechanisms.

Israel has expanded plans to build new homes in a disputed East Jerusalem neighborhood as well as in a nearby settlement, according to the Housing Ministry's proposed budget for 2008.

Earlier this month, Israel angered the Palestinians and drew criticism from the United States when it announced plans to build 307 new apartments in the East Jerusalem neighborhood of Har Homa.

Officials in Jerusalem state that Har Homa is an integral part of municipal Jerusalem, and not part of the Palestinian territories.

However, the Palestinians claim that any Israeli construction east of the Green Line, which was Israel's border before the 1967 Six-Day War, is an illegal settlement. They treat construction in East Jerusalem much the same as they treat construction in the settlement blocs in the West Bank.

The Palestinians said that construction in the territories is an obstacle to peace and an act that jeopardizes the negotiations, which was just revived in the Annapolis peace conference.

(Xinhua News Agency December 26, 2007)