JERUSALEM, August 6, 2008 (AFP) - Israeli Prime Minister Ehud Olmert met Palestinian president Mahmud Abbas on Wednesday, a week after the premier's announcement he would resign cast a cloud over peace negotiations.

The two were holding talks over a working lunch, Olmert's office said.

The meeting was the first since the embattled Olmert's surprise announcement last week that he would step down after his centrist Kadima party holds an election to chose a new leader on September 17.

The premier has been the target of six corruption probes and had for months faced mounting calls to resign from across the political spectrum, including from crucial coalition allies.

Palestinian negotiator Saeb Erakat has said the two men will discuss key issues in the peace process, Israeli checkpoints and closures in the occupied West Bank, and the fate of thousands of Palestinian prisoners.

Erakat said Abbas would follow up on an earlier request that Israel release several prominent Palestinian prisoners, including Marwan Barghuti, a popular leader in Abbas's Fatah party seen as a leading contender to succeed him.

Barghuti, a West Bank leader considered to have masterminded the second Palestinian uprising in 2000, was jailed in 2004 and is serving five life sentences for his role in deadly attacks.

Abbas also wants Israel to release prominent leaders from other factions, including parliament speaker Aziz Dweik from the Islamist Hamas movement, and Ahmed Saadat, the leader of the leftist Popular Front for the Liberation of Palestine (PFLP).

Olmert and Abbas have met roughly twice a month since talks were formally revived at an international conference hosted by US President George W. Bush in November in which they vowed to reach a peace deal by the end of this year.

The future of the talks, which have made little visible progress since they were relaunched, has grown murkier in the wake of Olmert's announcement.

Foreign Minister Tzipi Livni, who has been heading the Israeli negotiating team, is running neck and neck in opinion polls for the Kadima leadership with Transport Minister Shaul Mofaz, a hawkish former general seen as less invested in the peace talks.

Announcing his candidacy at a Jerusalem rally on Tuesday night, Mofaz vowed to 'preserve united Jerusalem as Israel's eternal capital.'

The fate of the Holy City is one of the most contentious issues in the US-backed talks, with the Palestinians demanding Arab east Jerusalem, seized by Israel in the 1967 war, as their future capital.

But in a subsequent interview with Israel's left-leaning Haaretz newspaper Mofaz vowed to advance peace talks with the Palestinians should he become prime minister, saying he would personally supervise them.

'It won't happen in two days and maybe not in a year, but there will be results,' he told the paper.