After a three-year stalemate, Israeli and Palestinian negotiators on Tuesday set themselves an ambitious goal to reach a long elusive peace deal within nine months.

Standing side-by-side with US Secretary of State John Kerry, who has dragged them back to the negotiating table, officials from both sides said it was time to end their decades-old conflict.

"I can assure you that in these negotiations, it's not our intention to argue about the past, but to create solutions and make decisions for the future," Israeli chief negotiator Tzipi Livni told her Palestinian counterpart Saeb Erakat.

Both sides have agreed to meet again "within the next two weeks," Kerry said, either in Israel or the Palestinian territories to begin formal negotiations.

"Our objective will be to achieve a final status agreement over the course of the next nine months," he added after hosting two days of talks in Washington.

In the past, during years of failure "we didn't complete our mission," Livni said, adding that Kerry's efforts had given them a new opportunity, which neither side could "afford to waste."

Erakat agreed, saying: "No one benefits more from the success of this endeavor than Palestinians.

"It's time for the Palestinian people to have an independent sovereign state of their own."

The top US diplomat, who has staked much of his reputation as secretary of state on his single-minded pursuit of a Middle East peace deal, said all the most contentious issues would be up for negotiation.

The so-called "final status issues" include such emotive and difficult problems as the right of return for Palestinian refugees, ejected from their lands with the 1948 creation of Israel; the exact borders of a Palestinian state, complicated by the mushrooming of Jewish settlements across the occupied West Bank; and the fate of the holy city of Jerusalem claimed by both sides as a future capital.

"I'm delighted all issues are on the table and will be resolved without any exceptions," Erakat told reporters at the State Department event.

Earlier, President Barack Obama lent his weight to the fresh American initiative to hammer out a Middle East peace deal, meeting with both Israeli and Palestinian negotiators at the White House.

Livni and Erakat also held their first bilateral talks in years at the State Department early Tuesday.

Kerry had broken the ice late Monday by hosting an iftar dinner at which Livni and Erakat sat side-by-side to break bread at the end of the Muslim day of fasting for Ramadan.

However, Livni admitted to Israeli public radio earlier Tuesday that disagreements within Israel's right-leaning governing coalition could pose an obstacle to any deal.

Kerry has named seasoned diplomat Martin Indyk as the US special envoy to the talks, and he is expected to take over the day-to-day work of keeping them on track.

It was not immediately clear if Kerry intended to return to the region for the next round of talks.

The Obama administration's last foray into the intractable Arab-Israeli conflict ended in failure, when talks launched in September 2010 collapsed just weeks later over continued Israeli settlement building.

But Obama has welcomed the start of new talks as a "promising step" forward, and promised US support as the two sides mull the "hard choices" facing them.

In a sign of the continued hostilities, a rocket fired from the Hamas-run Gaza Strip hit southern Israel early Tuesday but caused no casualties.

The Islamist militant group Hamas, which rules the Gaza Strip, is deeply opposed to the resumed talks, but has observed an informal truce with Israel since November.

Commentators have meanwhile questioned Israeli Prime Minister Benjamin Netanyahu's motives and what concessions he would be willing to make after his government approved the contentious release of some 104 long-serving Palestinian prisoners.

"The question is whether Netanyahu is happy with simply holding negotiations or if he really wants to reach a peace accord," Israeli public radio presenter Chico Menache said.

"It's difficult to know if he's ready to make territorial concessions on Israeli settlements."