But Michael Williams, the UN Special Coordinator for the Middle East Peace Process, who has just returned from a visit to the region, warned that unless the diplomatic process is carefully monitored and backed by “urgent and meaningful steps on the ground,” then it could easily falter.

“There is a hope now which has been absent for almost seven years,” he told a Council meeting on the Middle East situation. “A setback at this stage could have serious consequences.”

Mr. Williams said he welcomed the recent dialogue between Mr. Abbas and Mr. Olmert, who have held face-to-face talks several times this month.

“Both sides have reported substantive discussions and exchanges of ideas on permanent status issues, as well as on confidence-building steps. There also appears to be a welcome common desire to reach an agreement or understanding that could be presented” to the November meeting called by United States President George W. Bush.

Mr. Williams said that to meet the growing expectations, the current talks need to “shift gear” to achieve more concrete agreements on disputed issues and how to then implement those agreements.

But he welcomed the recent efforts of Palestinian Prime Minister Salam Fayyad to implement reforms – including the removal of redundant employees from the Palestinian Authority – and a serious security programme.

He also said that the anticipated engagement of former United Kingdom Prime Minister Tony Blair as the Representative of the Quartet, the diplomatic grouping that comprises the UN, the European Union, Russia and the US, was having a positive effect.

In addition, a series of upcoming high-profile international meetings on the Middle East, particularly the November meeting, was reinforcing the reform efforts of Mr. Fayyad and the dialogue between Mr. Abbas and Mr. Olmert.

Mr. Williams, who is about to step down from his post, also warned in his address about the political, economic and institutional consequences of the internal Palestinian divide, especially the deteriorating conditions inside the Gaza Strip. He also voiced concern about continuing Israeli-Palestinian violence over the past month, ongoing Israeli settlement activity and the political deadlock that still plagues neighbouring Lebanon.

Representatives of more than 30 countries addressed the Council after Mr. Williams, emphasizing that although there have recent signs of hope, much more needed to be done on the ground to genuinely reignite the peace process.