After meeting US Middle East envoy George Mitchell, on his way back from the region, EU foreign policy chief Catherine Ashton said: "We believe that urgent progress is needed towards a two-state solution ... that ends the occupation that began in 1967".

There was no word on a timeline or on a unilaterel recognition of a Palestinian state. And the statement made no mention of the settlements issue.

Calling once again for negotiations, Ashton and Mitchell said in a statement it was vital for either side to take into consideration "Israel's legitimate security concerns" and the "Palestinian's legitimate national aspiration".

Brussels and Washington also commended the work of the Palestinian Authority "in building the institutions of the future State of Palestine" and pledged further support for Palestinian institution-building.

They were concerned about the situation in Gaza, however.

Ashton said she had reiterated to Mitchell, the EU policy "calling for the immediate, sustained and unconditional opening of crossings to allow the flow of humanitarian aid, exports and people."

In Israel, Benjamin Netanyahu met with his inner Forum of Seven to discuss ideas for rescuing peace talks that were raised with Mitchell.

"The peace process has arrived at an impasse. The Palestinians are systematically refusing to enter direct negotiations with Israel, unfortunately," said a government official, speaking on condition of anonymity.

"The international community should appeal to the Palestinians to change their position and agree to come back to the negotiating table."

Mitchell held two days of talks with Netanyahu and Palestinian president Mahmud Abbas to try to find a way to keep the sides engaged in the search for peace.

But Arab diplomats on Wednesday ruled out a resumption of Israeli-Palestinian negotiations without a "serious offer" which would ensure their success.

They also decided to approach the UN Security Council to seek a resolution against Israel's ongoing settlement building.

Direct peace talks collapsed last week after Washington failed to secure Israel's agreement to a new freeze on settlement building -- the Palestinian condition for continuing to negotiate.

The US focus is now on new ideas, with Mitchell proposing six weeks of "parallel" talks, where negotiators would hold separate talks with the Americans in a format which would not be classed as "negotiations", a Palestinian official told AFP on Wednesday.

The Forum of Seven ministers was also to consider the possibility of widespread international recognition of an independent Palestinian state, the Maariv daily said.

Over the past few weeks, Palestinian officials have been talking up their options if peace talks with Israel totally collapse -- one of which is seeking recognition for a unilateral declaration of statehood.

Earlier this month, Brazil and Argentina recognised a Palestinian state, with Uruguay soon to follow suit. This week, EU foreign ministers expressed readiness to recognise such a state at an "appropriate" time.

Israel opposes such a move, saying a Palestinian state should only be established through negotiations.

And the US House of Representatives late Wednesday approved a measure condemning unilateral measures to declare or recognize a Palestinian state.

A House resolution, introduced by Democratic representative Howard Berman, reaffirms the "strong support" in the lower chamber of the US Congress "for a negotiated solution to the Israeli-Palestinian conflict resulting in two states, a democratic, Jewish state of Israel and a viable, democratic Palestinian state."

But the text also "reaffirms its strong opposition to any attempt to establish or seek recognition of a Palestinian state outside of an agreement negotiated between Israel and the Palestinians."

It urges Palestinian leaders to "cease all efforts at circumventing the negotiation process" and calls on foreign governments "not to extend such recognition."

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