"Let's not make expectations those that are impossible to achieve," Blair said of the separate talks the Israeli Prime Minister and Palestinian President Yasser Arafat will hold with US Secretary of State Madeleine Albright on May 4.

"But... If we can surprise ourselves from the expectations, let's do so,"Blair said after breakfast with Netanyahu in a Tel Aviv hotel.

"I think Prime Minster Blair is wise to caution (against) raising expectations too high or indeed to raise them to levels that we might not be able to achieve," Netanyahu said.

"Then again, we all want to be able to surprise ourselves and the world," he said, adding that he hoped to make "significant progress" on interim issues that would facilitate a final peace settlement.

The peace process has been stuck over the extent ofa proposed Israeli troop pullback in the West Bank in return for Palestinian moves to combat Muslim militants.

The US is reported to have proposed a 13.1 per cent withdrawal, which Israel has called unacceptable.

A top Palestinian negotiator said the time had come for the US to make its proposals public.

"We all know that Netanyahu's end-game is to waste time and to prevent the Americans from introducing their proposals publicly and officially," Saeb Erekat said in Gaza. "We hope that in the London meetings, Madam Albright will table her proposals immediately... It's the only way to revive the peace process," he said.

The US today formally invited Netanyahu and Arafat to the London talks after both men said they were ready to go to the British capital to discuss new US proposals. Blair held talks with Arafat in Gaza yesterday.