Meeting in Brussels for the first time under German presidency, the ministers said in a statement:”The Council expresses the hope that this meeting will be the first in a series of meetings in the framework of a renewed political process which should lead to meaningful negotiations on the final status.”

German Foreign Minister Frank-Walter Steinmeier said ministers were considering how the EU, United States and the UN "can support contacts" between Olmert and Abbas.

“The ultimate goal should be an end to the occupation that begun in 1967 and the creation of an independent, democratic and viable Palestinian state, living side-by-side with Israel and its neighbours in peace and security,” the EU statement said.

The EU called on Israelis and Palestinians to consolidate the Gaza ceasefire and to extend it to the West Bank.

The statement also stressed the importance of strengthening Palestinian institutions and said Israel should immediately transfer all withheld Palestinian tax and customs revenues.

EU ministers expressed ’deep concern’ at the recent authorization of settlement activities by the Israeli government "and the ongoing construction of the barrier on Palestinian land."

“These developments are contrary to international law and the road map,” the statement said.

“We think there is an opportunity now, an opportunity that should not be let go by to open the political process that should end up with the resolution of the conflict,” Solana declared.

European External Relations Commissioner Benita Ferrero-Waldner said she was ’heartened’ by a continuing ceasefire in Gaza and the Abbas-Olmert meeting.

Efforts by Abbas to forge a national unity government including members of the moderate Fatah movement as well as the radical Hamas group - which won last year’s elections - were also gaining pace, said Ferrero-Waldner.

’We are seeing a clear search for initiatives,’ said Ferrero-Waldner, adding that a meeting of the Quartet of peace negitiators (the EU, the US, Russia and the UN) in Washington on 2 February was important to keep the international community ”engaged.”

’We need a convincing political perspective,’ she said, adding that the formation of a Palestinian national unity government would be followed by an EU ’response’ if the administration met three key international conditions.

These include demands for recognition of Israel, an end to armed struggle against Israel and a pledge to abide by past peace treaties.