European Commission chief Jose Manuel Barroso called on Sunday for a return to Israeli-Palestinian talks, warning the peace process must not become "an orphan of the Arab Spring."

Barroso made the remarks during the first day of a trip to the West Bank, where he met Palestinian prime minister Salam Fayyad and Palestinian president Mahmud Abbas.

"The momentous change that we are witnessing throughout the Arab world should constitute an incitement and not a deterrent to the resumption of negotiations," he said after meeting Fayyad, according to an advance copy of his remarks.

"The Middle East peace process cannot become an orphan of the Arab Spring."

Direct negotiations between Israel and the Palestinians have been on hold since late September 2010, and efforts by the peacemaking Quartet -- which groups the EU, United Nations, United States and Russia -- have had little success.

Barroso urged continued peacemaking efforts and said it was "important that the two parties do not act in a way that undermines the viability of a two-state solution."

"In this respect it is with concern that we see the continuous growth of settlements in the West Bank, including east Jerusalem."

On Sunday evening, Barroso met with Palestinian president Mahmud Abbas for talks that also focused on the peace process.

In comments to the press after the meeting, Abbas repeated Palestinian demands that Israel halt settlement activity and agree to base border negotiations on the lines that existed before the 1967 Six Day War.

He also called on Israel to release dozens of Palestinian prisoners held in Israeli jails since before the signing of the Oslo Accords in 1994, reiterating that the release could lead to a "dialogue" that would fall short of negotiations.

"We know that we cannot reach a solution outside of the framework of negotiations," he said.

Barroso's talks with Fayyad and Abbas also touched on a burgeoning financial crisis that has left the Palestinian Authority that governs the West Bank unable to pay salaries.

Fayyad said Sunday that the current fiscal crunch "is serious, very serious. It's in the running for the worst financial crisis" faced by the PA.

The shortfall is the result of a gap between pledged and delivered donor funds, with Arab nations in particular failing to transfer promised money.

Abbas said he discussed the "difficult economic and financial situation" with Barroso, but stopped short of saying whether he had asked the EU to stump up additional funds.

Attempts by Abbas's Fatah movement and the rival Hamas group to reconcile were also on the agenda in Barroso's talks with both Palestinian officials.

The EU commission chief said after meeting Fayyad that the efforts were "a key factor contributing to the unity of a future Palestinian state and to reaching the two-state solution."

And he said that new elections, which are called for under the reconciliation deal signed last year but have been delayed, would constitute "a significant contribution to Palestinian state-building."

Fatah and Hamas officials have held several rounds of talks in Cairo and Doha since signing the reconciliation deal in a bid to chart a path to implementation.

But they have continued to disagree over the formation of an interim government and elections remain on hold, with Hamas last week announcing it was suspending voter registration by the Central Elections Commission.

Abbas said on Sunday that the suspension "cripples the reconciliation process that was agreed in Doha and Cairo."

Barroso is scheduled to meet on Monday with Israeli officials, including Prime Minister Benjamin Netanyahu and President Shimon Peres.

Their talks are expected to focus on the peace process but also efforts to curb Iran's nuclear programme, which Israel says poses an existential threat to the Jewish state.

EU officials said Barroso will also discuss with both Israel and the Palestinians the ongoing violence in Syria, where an uprising has been met with brutal repression and where observers fear the unfolding of a protracted civil war.