Israeli Prime Minister Ehud Olmert and Palestinian President Mahmoud Abbas plan to meet Tuesday for peace talks, a day before Mr. Olmert's Kadima Party elects a new leader.

The talks in Jerusalem will mark the last meeting between the two leaders.

Mr. Olmert has said he will step down after his party holds an election Wednesday to replace him. He faces corruption allegations that could lead to a criminal indictment.

Mr. Olmert and Mr. Abbas have met a number of times since U.S.-sponsored peace talks were re-launched in November with the goal of resolving the Israeli-Palestinian conflict by the end of this year.

But the two remain divided on the core issues of the conflict. They include the status of Jerusalem, Palestinian refugees, Jewish settlements and the borders of a future Palestinian state.

On Sunday, Prime Minister Olmert told his Cabinet that Israel must reach a peace deal with the Palestinians if it wants to avoid becoming a bi-national state of Jews and Arabs.

Mr. Olmert said Sunday he once believed Israel had a historical right to all of the West Bank but later realized that the land must be shared. He says people who still believe in the concept of a "Greater Israel" are deluding themselves.

Last week, Mr. Abbas told an Israeli newspaper, Ha'aretz, he doubts a peace deal will be reached by the end of 2008.

Some information for this report was provided by AFP, AP and Reuters.