US Secretary of State John Kerry cautioned though that the deal was not final and required more diplomacy.
Kerry, winding up his sixth Middle East brokering mission this year, gave few details. He anticipated Israeli and Palestinian envoys would come to Washington soon for what a US official said would mark the launch of direct negotiations.
"I am pleased to announce that we have reached an agreement that establishes a basis for resuming direct final-status negotiations between the Palestinians and the Israelis," Kerry told reporters in Amman.
"The best way to give these negotiations a chance is to keep them private," he said, saying that the deal was still being "formalised" and he would therefore not discuss it in detail.
"We know that the challenges require some very tough choices in the days ahead," he added. "Today, however, I am hopeful."
Peacemaking has ebbed and flowed for two decades, last breaking down in late 2010 over Israel's settlements in the occupied West Bank and East Jerusalem, where, along with the Gaza Strip, Palestinians seek statehood.
Hardline opposition
The Palestinians, with international backing, have said that state must have borders approximating the territories' boundaries before Israel captured them in the 1967 Middle East War – a demand hard to reconcile with the Jewish state's insistence on keeping swathes of settlements under any eventual peace accord.
Israeli and Palestinian officials cautiously welcomed Kerry's announcement. Both sides face hardline opposition at home to compromise in a stubborn conflict of turf and faith.
"I know that as soon as the negotiations start, they will be complex and not easy," Tzipi Livni, the Israeli Cabinet minister in charge of the diplomatic drive, wrote on Facebook. "But I am convinced with all my heart that it is the right thing to do for our future, our security, our economy and the values of Israel."
Wasel Abu Youssef, a senior member of the umbrella Palestine Liberation Organisation, said: "The announcement today did not mean the return to negotiations. It meant efforts would continue to secure the achievement of Palestinian demands…. Israel must recognise the 1967 borders."
Kerry said that Livni and Palestinian negotiator Saeb Erekat could travel to Washington "within the next week or so, and a further announcement will be made by all of us at that time".
Asked if that meeting of envoys would be considered the start of negotiations, a US official said, "Yes."
Months of talks
The talks would take months to unfold, an Israeli and a Palestinian official told Reuters on condition of anonymity. Such a duration, the Israeli official said, was needed "to ensure the process is substantive and comprehensive, and to get us past September."
That referred to the annual UN General Assembly, where the Palestinians had planned to seek recognition for their statehood claim in the absence of direct engagement with the Israelis.
The United Nations welcomed Kerry's announcement in a statement that called it a positive development, but it also urged both sides to "show leadership, courage, and responsibility to sustain this effort towards achieving the two-state vision."
Netanyahu, a right-winger, has long balked at withdrawing to the 1967 lines, and his coalition government includes a nationalist-religious faction opposed to any settlement removal.
But another coalition partner, centrist Finance Minister Yair Lapid, told Israel's top-rated Channel Two television, "There is a solid majority in this Cabinet for going to negotiations."
Abbas' own authority is in question. While his US-backed administration holds sway in the West Bank, Gaza is governed by rival Hamas Islamists who reject permanent co-existence with the Jewish state.
'Courageous leadership'
"Abbas does not have the legitimacy to negotiate on fateful issues on behalf of the Palestinian people," Hamas spokesperson Sami Abu Zuhri said.
Kerry's announcement, on the Jewish Sabbath evening and as Muslims ended their daily Ramadan fast, may have been meant in part to deflect domestic scrutiny from Netanyahu and Abbas.
Kerry commended the two for their "courageous leadership."
"Both of them have chosen to make difficult choices here, and both of them were instrumental in pushing in this direction. We wouldn't be standing here tonight if they hadn't made the choices," he said.
Kerry's drive to relaunch Israeli-Palestinian peace talks was endorsed this week by the Arab League, which potentially holds out the prospect of a broader regional peace with Israel upon the establishment of a Palestinian state.
The Arab League's own peace proposals, launched over a decade ago, foundered on the issue of a return to 1967 borders, but it confirmed on Wednesday it had shifted its position to countenance "limited exchange of territory of the same value and size." – Reuters