Abed Rabbo's proposal was not supported by other Palestinians

Yasser Abed Rabbo is a top aide to Palestinian leader Mahmoud Abbas and a member of the team currently negotiating with Israeli officials.

He said the Palestinians deserved independence more than Kosovo.

His comments come a day after talks between Mr Abbas and Israeli PM Ehud Olmert closed without visible progress.

Kosovo is not better than us. We deserve independence even before Kosovo, and we ask for the backing of the United States and the European Union for our independence

Yasser Abed Rabbo

The meeting is the latest in a series between Israeli and Palestinian negotiators and leaders, which was set in motion at a US-sponsored peace conference three months ago.

The aim, declared by US President George W Bush, is to achieve a peace deal by the end of 2008.

Militant activity in Gaza and Israeli plans to build hundreds more homes for settlers in the West Bank appear to have hampered the process.

'Real independence'

"If things are not going in the direction of actually halting settlement activities, if things are not going in the direction of continuous and serious negotiations, then we should take the step and announce our independence unilaterally," Mr Abed Rabbo told Reuters.

Abbas and Olmert met but there is no news of progress

"Kosovo is not better than us. We deserve independence even before Kosovo, and we ask for the backing of the United States and the European Union for our independence," he added.

But another negotiator and senior official, Saeb Erekat, disagreed arguing that the Palestine Liberation Organisation had already declared independence in 1988.

"Now we need real independence, not a declaration. We need real independence by ending the occupation. We are not Kosovo. We are under Israeli occupation and for independence we need to acquire independence," Mr Erekat said.

On Sunday, Serbia's breakaway province of Kosovo declared independence, in a move that has been welcomed by the US and some leading European states.

Settlement expansion

Also on Wednesday, a leading newspaper and peace campaigners in Israel reported that a Jewish settlement near the West Bank city of Ramallah was being expanded in contravention of commitments by the Israeli government.

The reports say 27 mobile homes are being built at the Eli settlement, and work is under way to connect them to utilities.

The Israeli government has not commented specifically on Eli, but said it was committed to its obligations under the road-map peace plan not to expand existing settlements.

Palestinian officials have repeatedly called on Israel to stop all settlement activity, which they say damages the prospect of reaching a peace deal.

In Jerusalem on Tuesday, Mr Olmert and Mr Abbas met, accompanied by top negotiators, for dinner before the two leaders held one-on-one discussions.

Little is known about what transpired, but Mr Erekat told the AFP agency that discussions "were deep, and tonight the prime minister and the Israeli delegation upheld their obligation to negotiate all final status issues".

In the days ahead of the meeting, Israeli and Palestinians disagreed over whether the issue of the status of Jerusalem should be left to the end of the talks process.

Senior Israeli officials have been briefing the press that the subject of Jerusalem was not raised by either side.

Jerusalem is among the thorniest issues in peace talks. Palestinians want East Jerusalem to be the capital of their state, but Israel claims exclusive sovereignty over the whole city.