The United States on Monday urged Israelis and Palestinians to work in good faith and make "reasonable compromises" ahead of the first direct talks in three years chasing a long-elusive peace deal.

In a bid to shepherd months of tough negotiations that lie ahead, US Secretary of State John Kerry named seasoned diplomat, Martin Indyk, to be the US special envoy to the talks.

And President Barack Obama welcomed the imminent start of the talks, urging both sides to approach them with honesty.

"The most difficult work of these negotiations is ahead, and I am hopeful that both the Israelis and Palestinians will approach these talks in good faith," Obama said.

The United States was ready to support both sides "with the goal of achieving two states, living side by side in peace and security," Obama added.

Speaking just hours before the first face-to-face public meeting since September 2010, Kerry again praised the courage shown by Israeli Prime Minister Benjamin Netanyahu and Palestinian leader Mahmud Abbas in agreeing to return to the negotiating table.

"Many difficult choices lie ahead for the negotiators and for the leaders as we seek reasonable compromises on tough, complicated, emotional and symbolic issues," he said.

"I think reasonable compromises has to be a keystone of all of this effort. I know the negotiations are going to be tough, but I also know that the consequences of not trying could be worse."

Indyk, 62, who has twice served as US ambassador to Israel and participated in the failed Camp David summit under then president Bill Clinton, said he was taking on "a daunting and humbling" challenge.

But he insisted: "It has been my conviction for 40 years that peace is possible."

The dream of a Middle East peace deal has for decades been a chimera chased by US presidents but has stalled since September 2010, shot down by deep divisions and distrust between the two sides.

Israel and the Palestinians remain deeply divided over so called "final status issues" -- including the fate of Jerusalem claimed by both as a capital, the right of return for Palestinian refugees, and the exact borders of a future Palestinian state which has been complicated by the spread of Jewish settlements across the West Bank.

After months of dogged diplomacy, Kerry on his sixth trip to the region earlier in July wrested from both sides an accord setting out the basis for resuming direct final status negotiations.

Livni, speaking after meeting UN chief Ban Ki-moon in New York, said the path ahead was "going to be very tough and problematic."

State Department officials said the first meetings would aim to set out the procedures for the talks going forward, and although it is believed Kerry has set a timeline for when he hopes to achieve a deal, it remains unknown how long it is with reports speaking of six months to a year.

Senior Palestinian official Hanan Ashrawi told AFP: "The meeting is to define what will come next, in the negotiations. There must be a timeline and commitment from both sides on what they'll agree about. We hope for something good."

As a first step towards creating some confidence, Israel said Sunday it would release 104 Palestinians imprisoned before the 1993 Oslo peace accords -- some of whom are said to have been involved in attacks on Israelis.

Erakat welcomed the Israeli vote. "We consider this an important step and hope to be able to seize the opportunity provided by the American administration's efforts," he told AFP.

The names of those to be freed have yet to be officially published, but Israeli and Palestinian groups have published their own lists of prisoners held for more than 20 years.

Israeli media on Monday lashed out at the decision. "The murderers will go free," thundered the front-page headline in the top-selling daily Yediot Aharonot.

Jerusalem Post diplomatic correspondent Herb Keinon predicted these "murderers will be hailed as heroes in Hebron and Ramallah and Jenin," and urged Palestinians to show they are serious about peace by not celebrating their release.

Israeli President Shimon Peres, on a visit to Latvia, hailed the resumption of peace talks. "We want to establish a two-state solution of a Palestinian state beside the state of Israel, living in peace and friendship and bringing an end to all conflict, which is so necessary today for all the people in the Middle East," he told reporters.

"The Middle East is in a stormy situation. We hope the Middle East will overcome its storm and land in a port of peace."

Israel, Palestinians agree to nine months of talks: US
Washington, District Of Columbia (AFP) July 29, 2013 - The Israeli and Palestinian delegations to renewed peace talks have agreed in principle to continue negotiations for at least nine months, the US State Department said Monday.

"They have all agreed to focus on having talks not just for the sake of talks, but this is the beginning of direct final status negotiations on a nine-month, at least a nine-month, timetable," Spokeswoman Jen Psaki said.

"They have agreed to work together through the course of that time," she added, speaking as the delegations arrived in Washington ahead of a dinner to mark the resumption of talks.

The United States invited the parties to a new round of talks in order to revive the stalled peace process, which last came to a halt in September 2010.

Psaki said the nine-month window was "not a deadline."

"This is an agreement that they will work together for at least that time period on this effort," she said.

"So we're going to make every effort to reach an agreement within that time frame, but again, if we're making progress and we're continuing to make progress, this is not a deadline."