Israel and the Palestinians have agreed to resume direct negotiations for the first time in 20 months, US Secretary of State Hillary Clinton has said.
Israeli PM Benjamin Netanyahu and Palestinian Authority President Mahmoud Abbas have been invited to Washington on 2 September to start the talks.
They have agreed to place a one-year time limit on the direct negotiations.
But correspondents say prospects of a comprehensive deal are slim, as serious disagreements exist on the core issues.
Sensitive areas - including the construction of Jewish settlements on occupied territory, the status of Jerusalem, the borders of a future Palestinian state and the right of return - will be difficult to overcome.
'Obstacles'
Speaking at the state department, Mrs Clinton said President Barack Obama had been encouraged by the leadership of Mr Netanyahu and Mr Abbas, and had invited them to Washington to "relaunch direct negotiations to resolve all final status issues, which we believe can be completed within one year".
"President Obama has invited President Mubarak of Egypt and King Abdullah of Jordan to attend, in view of their critical role in this effort. Their continued leadership and commitment to peace will be essential to our success," she added.
Mr Obama will hold meetings with the four leaders, followed by a dinner with them, on 1 September. Tony Blair, the special representative of the Middle East Quartet - which comprises the US, the UN, the EU and Russia - has also been invited.
A trilateral meeting at the state department between Mrs Clinton, Mr Abbas and Mr Netanyahu will formally relaunch the direct peace talks the following day.
"As we move forward, it is important that actions by all sides help to advance our effort, not hinder it. There have been difficulties in the past, there will be difficulties ahead. Without a doubt, we will hit more obstacles," Mrs Clinton said.
"But I ask the parties to persevere, to keep moving forward even through difficult times and to continue working to achieve a just and lasting peace in the region," she added.
"These negotiations should take place without preconditions and be characterised by good faith and a commitment to their success, which will bring a better future to all of the people of the region."
The Quartet issued a statement calling for talks that "lead to a settlement... that ends the occupation which began in 1967 and results in the emergence of an independent, democratic and viable Palestinian state living side by side in peace and security with Israel and its other neighbours".
Mr Mitchell said the US would be prepared to submit bridging proposals if the two sides failed to make progress.
Face-to-face talks have been on hold for nearly two years, despite US pressure Mr Netanyahu welcomed the US announcement, saying that "reaching an agreement is a difficult challenge but is possible".
"We are coming to the talks with a genuine desire to reach a peace agreement between the two peoples that will protect Israel's national security interests," his office said.
The chief Palestinian negotiator, Saeb Erekat, told the BBC that the talks with the Israelis should be productive.
"They have a choice now whether to choose settlements or peace. I hope they choose peace. I hope that Mr Netanyahu will be our partner in peace... and we can do it," he said.
The Islamist group Hamas, which controls the Gaza Strip, dismissed the direct talks as a US attempt to "fool the Palestinian people". However, US officials said Hamas would have no role in them.
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