Israel’s Parliament on Wednesday moved to pre-empt negotiations on the status of Occupied Jerusalem as Prime Minister Ehud Olmert reiterated his demand for Palestinians to recognize Israel as a “Jewish” state.

OCCUPIED JERUSALEM: Israel’s Parliament on Wednesday moved to pre-empt negotiations on the status of Occupied Jerusalem as Prime Minister Ehud Olmert reiterated his demand for Palestinians to recognize Israel as a "Jewish" state. The maneuvering comes ahead of an international peace meeting expected later this month in Annapolis in which Israel and the Palestinians are to lay down the basis for talks aimed at resolving the decades-old Middle East conflict.

But both sides remain deeply divided over the content of a joint document to be presented at the US talks, and the Palestinians have refused to accept Israel’s demand to recognize it as "the state of the Jewish people."

During talks in Jerusalem with European Union foreign policy chief Javier Solana, Olmert said that "the starting point for negotiations with the Palestinians following the Annapolis meeting will be recog-nition of the state of Israel as the state of the Jewish people."

"The prime minister made it clear that from Israel’s point of view, this issue is not subject to either negotiations or discussion," Olmert’s office said.

The Palestinians have already said they would not accept Israel’s demand, which would be an implicit renunciation of their claim of the right of return for Palestinian refugees.

"We recognize the state of Israel within its 1967 borders. We do not refer to the religion of any state but its borders. Such logic is unacceptable," Palestinian negotiator Saeb Erekat said earlier this week.

Britain tried to inject some optimism into the peace efforts on Wednesday when Prime Minister Gordon Brown pledged $500 million in Palestinian aid if there is "tangible progress" on improving regional security.

But back in Occupied Jerusalem the Knesset backed a move requiring a two-thirds majority to change the city’s status in a future peace deal, in a bid to deter Olmert from granting Palestinians a capital in the city’s Arab eastern sector.

The bill requires three further votes to become law.

Israel considers Jerusalem its "reunified and eternal" capital, while Palestinians have demanded that East Jerusalem become the capital of a future Palestinian state.

Israel occupied East Jerusalem, including the Old City with its sites holy to Christianity, Islam and Judaism, during the 1967 Middle East war and later annexed it in a move not recognized internationally.

The Haaretz daily reported on Wednesday, however, that the government plans to announce a freeze on settlement construction in the West Bank and declare a willingness to remove "illegal outposts" before the conference.

Both sides are struggling to thrash out an agreed joint document for the conference that would serve as the basis for future negotiations aimed at creating a Palestinian state.

Palestinians want the document to address core issues of the conflict – borders, the fate of refugees, settlements, and the status of Jerusalem – while Israelis prefer a more general statement of shared principles.

Olmert has vowed to proceed with peace talks on the basis of the 2003 "road map" peace plan, which calls on Israel to freeze settlement growth and to withdraw from outposts established after March 2001.

Foreign Minister Tzipi Livni told a joint news conference with Solana that she was "not in love with the road map."

"But I believe in the sequencing of the road map and the fact that it is clear that the path, the road toward a Palestinian state goes through the renunciation of violence and terrorism," she said.

Solana called the US talks "an opportunity, and I really believe we cannot afford to fail. It’s not only the meeting itself but the day after that will be as important, or more important than the meeting."

In Cairo, Egyptian President Hosni Mubarak told Parliament he hopes the meeting "relaunches serious peace negotiations over a set time limit."

"The growth of terrorism and extremism in our region and in the world reflects increasing feelings of anger and frustration due to the absence of a just peace," he said. "Peace is the prime condition for stability."