World powers facing a fateful deadline in the Middle East peace process will invite Israelis and Palestinians to begin direct talks on September 2 in Washington, a diplomatic source said.   

Envoys from the so-called Quartet of powers -- the United States, the European Union, Russia and the United Nations -- have been discussing a draft statement inviting the two sides to talks intended to conclude a treaty in one year, diplomatic sources said.   

Envoys from the Quartet agreed to the details on Thursday, one source told Reuters. A formal statement is slated to be issued on Friday.

"They've got an agreement that the talks will start on Sept 2 in Washington," said the source, speaking on condition of anonymity.   

The Israelis and Palestinians were expected to agree to attend, and President Barack Obama would be present at the talks, the source said.

The White House declined to comment late on Thursday. Obama is currently on vacation in Massachusetts.   

The Quartet said in June that peace talks would be expected to conclude in 24 months, but the new draft says 12 months. The Palestinian Authority government intends to have established all the attributes of statehood by mid-2011.

Diplomats say the idea that a unilateral declaration of statehood could win support if talks do not start or collapse in the next 12 months is gaining interest.
   
The peace process resumed in May after a hiatus of 19 months but is stalled over the terms of an upgrade from indirect talks mediated by US envoy George Mitchell to direct negotiations.   

Israel insists it is ready for direct talks provided there are no preconditions. The Palestinians are ready provided there is a clear agenda. Israel says an agenda means preconditions. Resolving the snag over terms is crucial, diplomats say.

 The "invitation to talks" statement by the Quartet has been awaited since Monday.

Obama wants face-to-face talks started well before September 26, when Israel's 10-month moratorium on Jewish settlement building in the occupied West Bank is due to end. Full-scale return to settlement construction could sink the talks for good.   

US Secretary of State Hillary Clinton spoke by telephone with the Quartet representative, former British Prime Minister Tony Blair, as well as Jordanian Foreign Minister Nasser Judeh Thursday as Washington kept up pressure for talks to resume.

State Department spokesman P J Crowley said: "We believe we are getting very close to an agreement to enter into direct negotiations. We think we're well positioned to get there. But we continue to work on the details of this process." -Reuters