WASHINGTON, Feb 12 (Reuters) - Middle East envoy Tony Blair will 'intensify' his work with US negotiator George Mitchell to broker peace talks between Israel and the Palestinians, US Secretary of State Hillary Clinton said on Thursday.

The former British prime minister represents the 'quartet' of Middle East negotiators made up of the United States, the European Union, the United Nations and Russia.

'Tony Blair, as the Quartet representative, will intensify his partnership with Senator Mitchell in support of the political negotiations,' Clinton said in a statement after speaking with Blair.

Clinton, reiterating Washington's commitment to finding a two-state solution to the Israeli-Palestinian conflict, said Blair would work to help lay the groundwork for a future Palestinian state and 'improve freedom of movement and access' for Palestinians.

A spokesman for Blair said the envoy was looking forward to stepping up his work with Mitchell and helping Palestinians prepare for statehood.

Over the past year, the spokesman said there had been some progress on the West Bank, but there was much more to do, especially in Hamas-ruled Gaza.

Israel has effectively imposed a blockade on Gaza. The Islamist Hamas movement refuses to recognize the Jewish state.

'We need a new strategy which starts to end the closure policy (of Gaza), so that reconstruction can advance further, and legitimate business can prosper,' said Blair's spokesman, without giving details on what a new strategy might be.

'By focusing on the bottom-up change, we can create the best possible atmosphere for political negotiations to succeed,' the spokesman added.

Clinton said Blair would coordinate with Mitchell to encourage more private-sector investment and improve the living conditions of the people in Gaza.

The United States has proposed circumventing a dispute preventing the resumption of talks, stalled for more than a year since a war in Gaza, by reconvening them in the form of 'proximity talks' on an indirect basis, under closer US mediation.

Israel has agreed to the formula but Palestinian President Mahmoud Abbas has said he will announce a decision after hearing answers to some questions he has put to Washington.

Palestinian Foreign Minister Riyad al-Malki, visiting Tokyo with Abbas this week, said the proximity talks should focus on border issues and their time frame should be limited to a maximum of three to four months.

Peace talks were halted more than a year ago over the war in the Gaza Strip and have not resumed, due largely to a Palestinian demand that Israel first impose a complete freeze on building in the West Bank and East Jerusalem and Israel's refusal to do so.

Abbas has rejected a limited, 10-month construction freeze ordered by Israel in November as insufficient, particularly for excluding Jerusalem. (Reporting by Andrew Quinn and Sue Pleming; Editing by Peter Cooney)