Prime Minister Ehud Olmert and Palestinian Authority Chairman Mahmoud Abbas have agreed to meet next week on a date and at a location yet to be decided, the Prime Minister's Office announced Wednesday.

Abbas aide Yasser Abed Rabbo told Palestinian radio earlier Wednesday that a foreign leader, possibly from an Arab state, would attend the meeting. He also declined to mention a venue.

The two leaders were set to meet two weeks ago, before the eruption of violence in Gaza, but that meeting was cancelled at the Palestinians' request.

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Foreign Minister Tzipi Livni told newly appointed Palestinian Prime Minister Salam Fayad on Wednesday that the establishment of the new emergency government means more chance of "progress on various issues... as well as advance[ment of] the political process," a Foreign Ministry statement said.

Abbas disbanded the Hamas-Fatah government last week after Hamas seized control of the Gaza Strip following days of violent clashes between the two Palestinian factions.

He then appointed Fayad to head an emergency government, which has won pledges of financial support from major Western powers who had imposed a crippling economic embargo on the Palestinian Authority after Hamas came to power in March 2006.

Israel and the new Palestinian government formally opened high-level contacts Wednesday. The move marked an end to Israel's 15-month-long boycott of the Palestinian government, which was sparked by Hamas' election victory.

Livni's conversation with Fayad was the first publicly disclosed contact between the two sides since Fayad's emergency government was sworn in over the weekend.

Abbas and Olmert are expected to discuss Hamas' takeover of the Gaza Strip last week. Abed Rabbo said the talks will focus on efforts to renew the peace process.

Olmert told U.S. President George W. Bush in a meeting Tuesday at the White House that he wanted to make every possible effort to cooperate with Abbas, whose Fatah movement seeks peace with Israel, but was vanquished by Hamas in Gaza.