JERUSALEM, Sept 5 (Reuters/Jeffrey Heller) - A peace deal with the Palestinians will require a creative, new approach to issues that have defied resolution in past negotiations, Israeli Prime Minister Benjamin Netanyahu said on Sunday.

Netanyahu, back from a Washington peace summit with Palestinian President Mahmoud Abbas at which they agreed to try to reach a framework accord within a year, gave no hint in public remarks to his cabinet about any new ideas he may have in mind.

The talks, relaunched on Thursday amid scepticism in Israel and the Palestinian territories, face an early hurdle when a partial Israeli moratorium on housing starts in West Bank settlements expires on Sept. 26.

Netanyahu has resisted extending the freeze, and Abbas has threatened to quit the negotiations if construction resumes. Palestinians see settlements on land Israel occupied in a 1967 war as obstacles to the state they seek.

For the talks to succeed, we will have to learn the lessons of 17 years of experience from negotiations and to think creatively -- what's called 'outside the box', Netanyahu told reporters at the cabinet session, referring to a peace process that began with the Oslo interim accords in 1993.

In order to achieve practical solutions, we'll have to think of new solutions to old problems. I believe this is possible.

In an interview with Palestine Television, Abbas said the talks would focus initially on borders and security, issues that touch on the future of settlements and Israel's demands for measures to ensure a Palestinian state will not pose a military threat.

If there is progress in these two issues, I think the negotiations will continue, and if there is no progress, and Israel insists on halting the moratorium, I think the situation will be very difficult, Abbas said.

Abbas and Netanyahu are due to meet next in Egypt on Sept. 14 and 15 for negotiating sessions that US Secretary of State Hillary Clinton also plans to attend.

HISTORIC COMPROMISE

Netanyahu's public pledge in Washington to pursue historic compromise has raised speculation in Israel the right-wing leader could show more flexibility than in the past in land-for-peace issues at the core of a decades-old conflict.

Referring to the settlement freeze, Palestinian chief negotiator Saeb Erekat told Israeli Army Radio: We know his (Netanyahu's) position. He knows our position, and let's see the next few days what will happen.

Israeli Defence Minister Ehud Barak, in a separate interview with the radio, said a way was being sought so that (lifting the moratorium) would not harm the continuation of talks.

Israeli officials, speaking privately, have pointed to a possible compromise -- new construction only in major settlements Israel intends to keep in any peace deal, which could include territorial swaps.

Saying a peace accord was doable, Erekat predicted an agreement on all major issues could bring Gaza back, a reference to diluting the influence of Hamas Islamists who seized the enclave in 2007 from Abbas's Fatah faction.

In a violent challenge to the peace talks, Hamas killed four Israeli settlers in a West Bank attack that coincided with the Washington summit.

On Saturday, Palestinian militants in Gaza fired rockets at Israel, drawing an Israeli air strike on smuggling tunnels along the territory's border with Egypt. Palestinian medical officials found the bodies of two tunnelers on Sunday.