US Secretary of State Hillary Clinton is expected to announce Friday that Israel and the Palestinians will resume direct peace talks for the first time in 20 months, the New York Times reported.

The Times, citing two unnamed officials briefed on the situation, said Israeli Prime Minister Benjamin Netanyahu and Palestinian leader Mahmud Abbas, have agreed to place a one-year time limit on the talks.

US President Barack Obama is expected to invite Netanyahu and Abbas to Washington in early September to start the negotiations, which will address "final status" issues, including the status of Jerusalem and the right of return for Palestinian refugees, the Times said late Thursday.

A return to direct negotiations would be the first significant achievement for the Obama administration's effort to facilitate Middle East peace talks.

Face-to-face negotiations between Israel and the Palestinians have been on hold for nearly two years, despite US pressure on both sides.

The last round of direct talks collapsed when Israel launched a devastating three-week offensive in Gaza in December 2008 in a bid to halt rocket fire from the enclave ruled by the militant Hamas movement.

Palestinian leaders, headed by president Mahmud Abbas, meanwhile were to discuss on Friday evening the expected call from the Middle East Quartet to renew direct talks with Israel, negotiator Saeb Erakat said.

The executive committee of the Palestinian Liberation Organisation, was set to meet in the West Bank city of Ramallah at 8:00 pm (1700 GMT), Erakat told AFP.

"It is premature to announce a Palestinian position" before the gathering of the PLO's top executive body, he said.

Palestinian sources expect the Quartet -- which comprises the United States, Russia, the European Union and the United Nations -- to issue a statement at 1300 GMT Friday in support of direct peace talks.

It should be followed immediately by a US invitation for Abbas and Netanyahu to travel to the United States on September 1 and 2 for the restart of the talks, the sources said. 

In Israel, the foreign ministry and the prime minister's office would not comment immediately.
The US State Department sounded an optimistic note on direct talks Thursday.
"We think we are very, very close to a decision by the parties to enter into direct negotiations. There are details that are still being worked out," State Department spokesman Philip Crowley told reporters.

Palestinian officials have said that any new statement would be modelled on one issued in Moscow in March that called on Israel to halt settlement construction and for the talks to lead to a final peace deal in two years.

Any statement could call on Israel to extend for another 10 months its limited freeze on West Bank settlement construction, which is to expire in September.

But Israeli media reported this week that a forum of seven top Israeli cabinet members decided to reject any Quartet statement.

"The Quartet declaration should allow the Palestinians to descend the tree they have climbed by refusing negotiations, but it is not binding on Israel," several Israeli media outlets quoted an unnamed minister as saying.

Israel says it is prepared to enter direct negotiations, but without preconditions, but the Palestinians have demanded a halt to all Israeli settlement activity and guidelines on the negotiation of final borders.

Both Netanyahu and Abbas have visited Washington in recent months for talks with Obama, with the White House urging a speedy return to direct negotiations.

The two sides have accused each other of stymying direct talks, but both parties agreed, albeit reluctantly, to indirect "proximity" talks that began in May, facilitated by US Middle East envoy George Mitchell.

(Source: AFP)