Vice Premier Shimon Peres said Wednesday that Palestinian leaders must overcome their differences and present a united front if peace talks with Israel are to succeed.

"We are ready to give back land. We are for a Palestinian state beside an Israeli state," Peres told an audience at London's Royal Institute of International Affairs.

But he warned: "They must show a talent to come together. They must have one government. They must have one army. You cannot have a state if you don't have a united people."

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In the Gaza Strip on Wednesday, officials said Palestinian President Mahmoud Abbas and the ruling Hamas group failed to agree on how to form a unity government. The talks have stalled over whether the government will recognize Israel.

Turning to Israel's conflict with Hizbollah in Lebanon, Peres said it had exposed weaknesses with the Israeli forces that had to be rectified.

"We don't have an army that is trained and equipped to fight against terrorists," he said. "We have to introduce new technologies and we have to produce a weaponry that is more minute, more robotic, more organised to recognise danger."

Peres: Israel open to talks with Syria if given reasonable offer
Peres responded to Syrian president Bashar Assad's claims of wanting to make peace with his country by saying Wednesday Israel would welcome talks if Damascus offered a realistic offer.

Assad was quoted in German weekly news magazine Der Spiegal as saying, "We want to make peace - peace with Israel." But Peres said the Syrian leadership's offers to talk peace are not realistic.

"Now again, Assad is saying he wants peace," Peres told an audience at the Chatham House think tank in London. "How? That Israel give back the Golan Heights, that Israel will settle the Palestinian problem and then he will deal with us. What sort of a proposal is that? He wants to negotiate - let him come with his opening positions, we shall offer counter positions and we shall negotiate."

Peres added it is a "little bit out of proportion" to tell Israel to make all the concessions before any negotiations can begin.

While Syria's support for, and its harboring of, figures such as Hamas' top leader, Khaled Meshal, made peace with the Palestinians elusive.

He said Hamas' exiled leadership in Syria was blocking a deal for the release of Gilad Shalit, the Israeli soldier captured by militants linked to the group on June 25.

"You know the Palestinians don't make peace because of a small group (Hamas), their leader (Mashaal) sits in Damascus.

"He doesn't commit them to release the soldier. Even the Hamas people wants to release him and the president of Syria is hosting him. Do you think that gives us great pleasure and appreciation?"

Prime Minister Ehud Olmert said earlier on Wednesday he would not hold peace talks with Syria at the present time, brushing aside Assad's overture.

Olmert also demanded his Cabinet ministers stop discussing the Syrian issue in the media. He was apparently reacting to comments by Defense Minister Amir Peretz, who said Tuesday he believes peace with Syria was key to stability in the Middle East.