The framework of discussions between Israel and the Palestinian Authority will be expanded to include the establishment of negotiating teams for each side, which will discuss the agreement of principles to be prepared ahead of the international conference in November, a senior government official said yesterday.

Prime Minister Ehud Olmert and Palestinian Authority Chairman Mahmoud Abbas are to meet today to further discuss the agreement of principles. Meetings between Olmert and Abbas have so far been private, but the framework will now be expanded in order to "reach November with a logical product," the official said.

Olmert and Abbas are expected to meet again before Rosh Hashanah; sources in the Palestinian Authority said that in their next meeting, Olmert and Abbas will try to agree on as many issues as possible, in order to be able to present both their points of contention and agreement to U.S. Secretary of State Condoleezza Rice when she comes to the region in mid-September.

However Palestinian sources also said that while progress had been made, Olmert seemed interested only in a declaration of intent, while Abbas wanted to formulate a detailed document that would set out the Israeli position on the main issues.

The main development in the talks so far has been Olmert's acceding to the inclusion in the agreement of principles of the "core issues" - Jerusalem, permanent borders and refugees. This represents a reversal of his earlier position that raising these issues might lead to a breakdown in the negotiations.

The government official explained that Olmert has been persuaded to present the Palestinians with a political horizon, "so that Abbas will not lose the support of the Palestinian masses."

Referring to the appointment of Salam Fayad as Palestinian prime minister, the official said "two months ago a partner was born, and we must now talk to him about everything. We want to bring other countries into the process and reach more significant conclusions."

The source also said that "implementation will be subordinate to the road map," meaning that Israel will insist on the disbanding of terrorist organizations at the outset and the establishment of a Palestinian state in stages, rather than a final-status arrangement in one move. Thus it seems Olmert is willing to be flexible on a declarative level, while leaving "safety valves" on the road leading from principles to action.

The official said Olmert would not offer Abbas any new gestures involving an easing of restrictions on the Palestinians. The security establishment has still not completed its plans for removing road blocks and obstacles in the West Bank, which Olmert had pledged to Abbas more than two months ago.

Defense Minister Ehud Barak held a preliminary meeting last week and asked the army to present a detailed proposal that would include new operational roads. Barak is said to support temporary "flying roadblocks" in the West Bank that could replace permanent ones, thus easing passage for Palestinians while making it more difficult to carry out attacks. However he reportedly believes that moving to a new operational concept will require new deployment and training in the IDF, which will take time.

Foreign Minister Tzipi Livni and Fayad agreed at their meeting in Jerusalem yesterday to strengthen civilian and economic ties between Israel and the Palestinian Authority. To this end, they resolved to establish committees for economics, social affairs and the environment. It was also suggested that meetings between mayors from each side be organized to promote joint projects.

The meeting between Livni and Fayad was their fourth since Fayad took office in June.

Livni told Fayad she appreciated the actions of the Palestinian security forces yesterday, in assisting the Israeli officer who mistakenly entered Jenin.

Over the past few days, a special team has been set up in the Foreign Ministry to deal with preparations for the regional conference in November. The team will be headed by Foreign Minister Director General Aharon Abramovich, and a number of relevant department heads will also be included.

A senior government source noted that the team will prepare a number of position papers for Livni to submit to Olmert. The team will work mainly to prepare a plan of action to show the international community and the Arab world, in order to draft support for the regional conference and for subsequent talks between the Israelis and the Palestinians.

The team members are to prepare a list of steps Israel will take, and steps that Israel will ask the Arab world and the members of the Quartet to take. "The goal is to be ready with plans for the continuation of negotiations" following the summit, the official said.

Diplomatic activity is to be renewed next week with the end of the summer vacation. Assistant U.S. Secretary State for Near Eastern Affairs David Welch is to come to the region ahead of Rice's planned visit. The Quartet's Middle East envoy, Tony Blair, is also expected to visit the region soon.