Israel has agreed to discuss the concept of "a time-out" in the building of Jewish settlements in the territories occupied since 1967. Mr Netanyahu said: "You know we are building in the settlements, enabling natural growth of the settlements and I don't intend to change our policy."
Negotiations were broken off in March when Mr Netanyahu started to build a settlement for 6,500 Jews at Har Homa, called Jabal Abu Ghneim, in between Palestinian districts in East Jerusalem. Mrs Albright said she hoped "to have been able to take a small step forward" by announcing renewed talks in the US.
The first set of talks start next week and will cover implementation of the Interim Agreement of 1995 signed by the previous Israeli government. Issues to be discussed include the opening of a Palestinian port and airport and safe passage between Gaza and the West Bank. The Palestinian Authority also wants Palestinian prisoners released.
A second set of talks, on 13 October, will deal with the concept of a "time-out" in Jewish settlement building. It will also cover Israeli withdrawals from the West Bank and a shift to final status talks dealing with the core issues in dispute between Israel and the Palestinians. However, it seems that Mr Netanyahu wants to stall the implementation of the present stage of the Oslo accords, under which Israel would effectively end its occupation of much of the West Bank.
Mr Netanyahu has insisted that Yasser Arafat, the Palestinian leader, act against Hamas, the Islamic militant organisation behind suicide bombings.
He said: "If they fight terror we will continue with the peace. If they don't, we won't." Israeli officials say Mr Arafat's security men have in recent days being rounding up "the sharks and not just small fry".
Israeli press reports say Israeli security forces have identified Adek Awadallah, a resident of Ramallah, as the organiser of the suicide bombings which killed 20 Israelis in Mahane Yehuda market and Ben Yehuda pedestrian mall.