Palestinian President Mahmoud Abbas on Sunday laid down his conditions for renewing stalled peace negotiations with Israel.

The new Israeli government "would have to accept the creation of a Palestinian state, stop construction in West Bank Israeli settlements and remove army roadblocks crippling life in the West Bank so that we can resume dialogue in order to reach a political solution," Abbas said.

The Palestinian leader was speaking during a visit to Baghdad.

A few hours before Abbas' declaration, Prime Minister Benjamin Netanyahu opened his new coalition's inaugural weekly cabinet session by announcing that the next weeks would be dedicated to setting a policy for the advancement of the peace process.

"Today, we will establish a political-security cabinet and in the coming weeks we will complete the formulation of our policy to advance peace and security," Netanyahu told the 30 ministers and seven deputy ministers gathered for the session in Jerusalem.

The premier's comments came amid fears that his right-leaning government would stem any progress reached by former prime minister Ehud Olmert's administration in peace talks with the Palestinians and Syria.

"This government is a genuine unity government," he added. "It was created out of a sense of deep responsibility concerning the need to deal with the urgent security, economic and social challenges that Israel faces. And so with that, we set to work."

The prime minister told the cabinet that he planned to annul the previous government's decision to create an Israeli 'White House' with the hopes of reaching a more "modest proposal" for the premier's residence.

Ministers were also to vote on a number of ministerial panels during Sunday's meeting.

Meanwhile, Netanyahu promised ministers that over the coming days he would appoint a chairman of the health ministry, following the ire raised over the lack of a Health Minister appointed to the new government.

Labor chief: Israel committed to signed agreements

In his first remarks since the Netanyahu government was sworn in, Labor Party chairman and Defense Minister Ehud Barak said on Sunday that Israel is bound by agreements that it has signed with the Palestinians, and that he "was not devoid of doubts, despite the fact that I supported going to the government."

"In my view, only time will tell if this was the right move," Barak said. "I feel this was the right move. I feel a sense of overall responsibility that this is right for the country," Barak said in a holiday toast with moshav members.

The Labor chairman said the party will be judged by its ability to bear an influence on government decisions and the results of what will happen. "Here is our real test, whether we are able or not able to bring this government to take steps, not in the spirit of Lieberman's declarations, but in the spirit of our positions."

Barak said that in contrast to Lieberman's view, "the government of Israel is bound by all previous diplomatic and international agreements and it will continue to act and to work towards achieving peace agreements with all its neighbors through every avenue and it will formulate a plan for a regional agreement which includes peace and cooperation."