The two sides agreed under pressure from U.S. Secretary of State Condoleezza Rice to resume the U.S.-backed talks on Wednesday after the Palestinians suspended them in protest of an Israeli offensive in Gaza that killed more than 125 people.

Israeli Prime Minister Ehud Olmert signalled willingness to stop attacks after the five-day offensive, which killed many civilians in the territory, if the Islamist group Hamas stopped firing rockets into Israel.

Hamas's Western-backed rival, Palestinian President Mahmoud Abbas, had said he would not return to statehood talks with Olmert until Israel reached a ceasefire in Gaza.

Rice finished a three-day troubleshooting visit to the region on Wednesday by dispatching an envoy to Cairo, a key player in trying to broker calm.

Palestinian officials said Egyptian mediator Omar Suleiman would present Israel and Hamas with a truce proposal including a mutual cessation of hostilities and Israel's assent for key border crossings to open. Suleiman is due in Israel next week.

The United States hopes negotiations could result in an accord before U.S. President George W. Bush leaves office next January.

Israel's Haaretz daily quoted Israeli officials as saying "junior representatives" of the negotiating teams may meet as early as Thursday.

Israel called its push into Gaza a response to rocket strikes by Hamas. A rocket killed an Israeli civilian last week and two soldiers died fighting Gaza gunmen.

Hamas, who opposes the peace talks with Israel, routed forces loyal to the Western-backed Abbas to seize the Gaza Strip in June.

Hamas was cool to Olmert's overture, though its rocket fire has largely abated since Israeli troops withdrew from the coastal territory on Monday.

Hamas says attacks from Gaza, including rockets fired by its own militants and others, are a response to Israeli military operations in both Gaza and the occupied West Bank and would end if Israel stopped all such activity and lifted its blockade.

About 290 rockets were fired from Gaza into southern Israel in the past week, the Israeli army said.