Ahead of U.S. President George W. Bush's arrival in the region later Wednesday, Israeli and Palestinian leaders agreed to begin tackling the core issues of a final peace agreement in a last-minute push to breathe life into stalled negotiations.

The renewed peace talks, formally launched at a U.S.-hosted conference in November, are a centerpiece of Bush's agenda in his last year of office. But negotiations have made little headway, marred by Israeli construction plans in disputed territory and Palestinian militant attacks in the West Bank and Gaza Strip.

Bush hopes in the three-day visit to get peace talks back on track. At the November peace conference in Annapolis, Maryland, Israel and the Palestinians pledged to reach a final agreement by the end of the year, before Bush leaves office.

Israeli Vice Premier Haim Ramon said Wednesday the sides were somewhat belatedly beginning to discuss the most contentious subjects, and that he believed Bush's visit will help the sides reach an agreement.

"I am happy that we are beginning to talk on the subjects that perhaps we should have begun to talk about earlier," Ramon told Army Radio. "Both sides relate to his (Bush's) requests and his wishes and his visit will certainly accelerate the talks."

Israel was making the final touches on the preparations for the Bush visit, deploying about 10,000 police in Jerusalem, employing garbage collectors in the holy city and rolling out red carpets at the airport.

Aides to Israeli Prime Minister Ehud Olmert met overnight to outline Israel's "red lines" in the negotiations with the Palestinians that Olmert will present to Bush in their meeting later Wednesday, Army Radio reported.

At Tuesday's meeting between Olmert and Palestinian President Mahmoud Abbas, the sides pledged to move beyond their recent disputes and have negotiators begin work immediately on the so-called final status issues. These issues include the final borders between Israel and a future Palestine, completing claims to the holy city of Jerusalem, the fate of millions of Palestinian refugees and Israeli security concerns.

Palestinian negotiator Saeb Erekat, who attended Tuesday's talks, said the meeting was "serious and in depth," and confirmed the two leaders told negotiators to begin talking about core issues.

"The president (Abbas) urged that the year of 2008 be a year of peace," he said.

At Annapolis, Olmert and Abbas pledged to begin work immediately on the big issues, but negotiations have hit a number of snags.

The Palestinians are furious about Israeli plans to build new housing in east Jerusalem and the West Bank — areas captured by Israel in the 1967 Mideast war and claimed by the Palestinians for their future state.

Israel, for its part, has demanded that Palestinian forces do more to rein in militants in the West Bank. Since Olmert and Abbas last met, two Israelis were killed in the West Bank, and Israeli security forces say members of Abbas' Fatah movement were responsible.

U.S. Secretary of State Condoleezza Rice, who will be accompanying Bush, called Tuesday for the Israelis and the Palestinians to move quickly.

"We do expect both sides to act with urgency, we do expect the negotiations to move forward, we do expect both sides to live up to their obligations," she said in an interview with Israel's Channel 10 TV. "The Palestinians need to do everything they can to fight terror. Israel frankly needs to look at its road map obligations and to do nothing that would prejudge the final status agreement."

The U.S.-backed "road map" peace plan requires Israel to freeze settlement construction and the Palestinians to crack down on militants.

Last week, Israel carried out a broad sweep in the West Bank city of Nablus, arresting 20 suspected militants and uncovering weapons, an explosives laboratory and ammunition.

During Tuesday's meeting, the Palestinians called on Israel to halt settlement activity and urged Israel to stop carrying out military operations like the Nablus raid, saying it damaged Abbas' credibility on the Palestinian street.

"We hope that the Israeli government ... would refrain from any act that may pre-empt ... the issues of permanent status negotiations and will stop the military attacks in the West Bank and Gaza," Erekat said.

Israel says it can't relinquish security responsibilities to the Palestinians because they are not ready.

Nablus, a center of militant activity, is a test case of Abbas' ability to impose law and order in the West Bank, and a beefed-up Palestinian security contingent has been deployed there. In a sign of success for Abbas, 12 gunmen wanted by Israel surrendered to the Palestinian forces in Nablus.

Further casting a shadow over peace efforts is the Hamas militant group's control of the Gaza Strip. Hamas seized the area last June after routing Abbas' forces.

The group, which is committed to Israel's destruction, opposes the U.S.-led peace efforts. While talking peace with Abbas, Israel conducts military operations in Gaza almost every day in a bid to halt rocket-launching squads. Dozens of militants have been killed in recent weeks.

In Gaza, Hamas said it would hold a rally against the Bush visit on Wednesday. "You killer of children, go. You are not welcome in the Holy Land," Hamas said in a leaflet.

Israeli hardliners critical of Bush's peace efforts put up posters on a main Jerusalem road showing Bush, Olmert and Israeli President Shimon Peres wearing traditional Arab headdresses, under the title, "Accomplices to Terror."

Main streets across Jerusalem were to be closed at midnight, snarling traffic for the city's 750,000 residents.

The military said that as an added security precaution it was barring all entry to Israel by Palestinians, from midnight Tuesday until after Bush leaves Friday.

In the West Bank town of Ramallah, Abbas' headquarters were painted inside and out, and a main courtyard was repaved.