The U-S peace envoy to the Middle East Dennis Ross met the Palestinian negotiator, Saeb Erekat in Jericho on the West Bank on Wednesday.
This follows the Palestinian leader Yasser Arafat accepting a U-S proposal to withdraw Israeli troops from the West Bank.
But in line with his increasing defiance, the Israeli Prime Minister said such an arrangement would be detrimental to Israel's security.
Ross has an uphill battle to pave the way for a successful meeting next week in London between U-S Secretary of State Madeleine Albright and Israeli and Palestinian leaders.
Meanwhile in Gaza, Palestinian leader Yasser Arafat was meeting Egyptian Foreign Minister, Amr Moussa where both men called upon the Israelis to take a more flexible approach to U-S proposals for a staged withdrawal of Israeli troops from the West Bank.
U-S Mideast envoy, Dennis Ross set out once again to breach the divide between Israel and the Palestinians on Wednesday meeting the Palestinian's chief negotiator in Jericho.
He emphasised the urgency of rebuilding trust between the two sides prior to their meeting for peace talks with U-S Secretary of State Madeleine Albright in London next week.
There has been speculation in the media that the United States might call off the London talks if Ross fails to narrow the gap between the two sides.
But Ross did his best to sound optimistic.
"May 4th is an important date, because it also reminds us that we have one year left before the end of the interim period. And I think it is essential that we find a way to break through, not only because we've had a stalemate for too long, but also because we've got to begin to restore hope, we've got to begin to restore a sense of possibility. We have to reestablish the kind of communication between the parties that allows them again to know that they can solve problems together."
SUPER CAPTION: Dennis Ross, U-S Mideast Envoy
Meanwhile, Palestinian leader Yasser Arafat met the Egyptian Foreign Minister Amr Moussa in Gaza on Wednesday.
Moussa was in Gaza to sign economic agreements, but took the opportunity to criticise the Israeli Prime Minister Benjamin Netanyahu's intransigence.
"It doesn't stand a chance when you discuss it objectively and substantively, that he is ready to stand against the whole world - this is absolute nonsense - This is irresponsibility"
SUPER CAPTION: Amr Moussa, Egyptian Foreign Minister
Netanyahu's has been increasingly defiant in his attitude towards the peace process.
Palestinian leader Yasser Arafat on Wednesday accepted a U-S proposal to withdraw Israeli troops from the West Bank.
However, in accepting the American proposal Wednesday, Arafat warned that he would not make further concessions on the pullout.
But Netanyahu said it would compromise Israel's security.
Arafat demanded that the Israeli Prime Minister take a more flexible approach.
"He has to remember, I mean Mr. Netanyahu, that he went with Shamir to Madrid on the platform of land for peace, and not the excuses of security which he uses only to stop and not to implement accurately and honestly what had been signed and what had been agreed upon."
SUPER CAPTION: Yasser Arafat, Palestinian leader
Arafat said the Palestinians had accepted Washington's plan - even though the proposed 13 percent withdrawal falls short of the 30 percent of the West Bank they wanted.