Tony Blair has said there is a new "moment of opportunity" in the Middle East, but cautioned against any peace deal soon.

The former prime minister, in his first visit as an international envoy, said he came "to listen and to learn and to reflect" in preliminary talks with Israeli and Palestinian leaders.

The Quartet of peace brokers - the US, European Union, United Nations and Russia - have asked Mr Blair to present a plan for building ruling institutions for a future Palestinian state in September.

Following a meeting, Palestinian prime minister Salam Fayyad said Mr Blair was "uniquely positioned to help us move forward."

Mr Blair said: "I think there is a sense of possibility at the moment. I think this is a moment of opportunity."

Earlier, in remarks after talks with Israeli president Shimon Peres, Mr Blair said it would take work and thought to translate possibilities "into something".

He also met Palestinian president Mahmoud Abbas, whose secular Fatah faction lost control of Gaza to Hamas Islamists in fighting last month.

The development led Israel and the West to boost their efforts to bolster the moderate leader.

Mr Blair will end his day with a private meeting with Israeli prime minister Ehud Olmert.

Diplomats said Mr Blair's limited mandate could expand later into a more direct peacemaking role, an idea backed by Mr Abbas's aides. But many Israeli officials are less inclined to agree.

Hamas, which has spurned international demands to recognise Israel, renounce violence and accept interim peace agreements, has said Mr Blair must deal with the Islamic movement and avoid "double standards".

But he has shunned the group during the visit.