Israeli Prime Minister Ariel Sharon and the leader of the opposition Labour Party, Shimon Peres, are inching towards forming a coalition government.
The aim is to form a national unity government that can push through Mr Sharon's plan to withdraw from Gaza.
Mr Sharon's own Likud party rejected the plan and he needs the support of the Labour party to implement it.
Mr Sharon and Mr Peres met on Monday and agreed to go back and talk to their own parties about building a coalition.
Reports quote officials from Mr Sharon's office saying the talks were "held in a good atmosphere", but that no detailed talks on the make-up of a new government had begun.
At Last Israel is moving to a goverment of national unity which is more representative of Israel and which is more open to peace with the Palestinians.I hope the Palestinian leadership is as serious as Israel.