With a diplomatic push from US President Barack Obama, Israeli and Palestinian leaders were to start direct peace talks yesterday overshadowed by scepticism on all sides and violence in the volatile West Bank.

Israeli Prime Minister Benjamin Netanyahu and Palestinian President Mahmoud Abbas were due to meet at the State Department, relaunching talks after a 20-month hiatus and seeking a deal within one year that will set up an independent Palestinian state side by side with a secure Israel.

Obama, who has staked considerable political capital on the Washington talks, urged both sides to grasp the chance for peace after separate meetings at the White House on Wednesday.

"This moment of opportunity may not soon come again. They cannot afford to let it slip away," Obama said after a day of personal diplomacy on a problem that has confounded generations of US leaders.

But opponents of a settlement threatened to sabotage the talks.

In Gaza, Hamas said its militants would keep on attacking Israelis in settlements in the West Bank, where Palestinian police have rounded up more than 500 Hamas suspects after an Islamist group member shot dead four Jewish settlers on Tuesday.

Jewish settlers announced plans to launch new construction in their West Bank enclaves, defying the Israeli government's moratorium which ends in three weeks.

Abbas has warned he will walk out unless Israel extends its moratorium before it expires on September 26.