Palestinian Authority sources said at the weekend that Israeli Prime Minister Ehud Olmert has privately agreed to surrender the eastern half of Jerusalem - including the Old City and Temple Mount - to the Arabs as part of any final status peace agreement.

Speaking to the official Palestinian Authority newspaper Al Hayat Al Jadeeda, one official said that Chairman Mahmoud Abbas told visiting US Secretary of State Condoleezza Rice last week that Olmert had assured him Israel would ultimately meet the long-standing Arab demand on control of Jerusalem.

Olmert reportedly made the promise during a recent preparatory meeting with Abbas ahead of a major US-hosted Middle East peace summit scheduled to take place in Washington in November.

In an appearance before the Knesset Foreign Affairs and Defense Committee on Monday, Olmert confirmed that he stands ready to surrender most of Judea and Samaria as part of what he hopes would be a genuine peace agreement with the Palestinians, reported The Jerusalem Post.

However, Olmert looked to lessen expectations of the upcoming gathering, telling lawmakers they should see it as a “short international meeting intended to give international encouragement to the process that we initiated with the Palestinians” rather than a full-blown “peace conference.”