Tel Aviv  - The Palestinians should not demand an end to all settlement activity before entering peace talks with Israel, Israeli President Shimon Peres said Tuesday hours ahead of a three-way Mideast peace summit in New York.

The Palestinians should drop their precondition for resuming peace talks with Israel, Peres was quoted by Israeli media as saying.

Palestinian President Mahmoud Abbas has made a total freeze of Israeli settlement activity a condition for resuming peace talks with the new Netanyahu government - and initially for meeting him as well.

US President Barack Obama is to host Israeli Prime Minister Benjamin Netanyahu and Abbas in New York later Tuesday, for their first meeting since the former took office almost six months ago.

Washington convinced Abbas to agree to the meeting, despite its failure to pressure Netanyahu into accepting a total freeze of Israeli construction in the occupied West Bank.

"All sides are lowering expectations," Peres said, "but one cannot lower our hopes for peace," Peres said, addressing students at an agricultural school in northern Israel.

Netanyahu, while accepting the policies of previous Israeli governments to build no new West Bank settlements, has acquiesced only to a limited and temporary moratorium of construction within existing ones.

To appease right-wing Israelis, he has approved the construction of nearly 3,000 new apartments throughout West Bank settlements. Beyond that, his government has said it is willing to freeze construction elsewhere in the West Bank for up to nine months, but East Jerusalem would also not be included in the moratorium.

Abbas has rejected that offer. He nonetheless reluctantly accepted Obama's invitation to the triple summit in New York - despite the failure of Washington's Middle East envoy, Senator George Mitchell, to broker a last-minute deal on the settlement issue in frantic shuttle diplomacy between Jerusalem and Ramallah over the weekend.

The absence of a deal has dashed Obama's hopes to announce a relaunch of the Israeli-Palestinian peace process at the summit. Critics have charged that parley will be little more than a photo opportunity, aimed at saving face for the president, who had put his prestige behind holding the summit.

Peres, known as a moderate but nonetheless on good terms with the hardline Netanyahu, Tuesday backed the Israeli premier and criticized Abbas, calling his demand that Israel halt all settlement activity prior to a resumption of peace talks a "mistake."

Chief Palestinian negotiator Saeb Erekat, meanwhile, said in New York that the Palestinians had not changed their position.

Obama was expected to attempt to narrow the gaps between the parties in separate talks with Netanyahu and Abbas just before the summit. However, he has allocated only 30 minutes each for the private talks with Netanyahu and Abbas, which Mideast observers interpreted as an indication that he had no real expectations he would succeed in convincing them to abandon their positions.(dpa)

The White House itself too played down the prospect of a breakthrough, with spokesman Robert Gibbs telling reporters Monday that "we have no grand expectations out of one meeting except to continue ... the hard work, day-to-day diplomacy that has to be done to seek a lasting peace."