US President Barack Obama's Middle East envoy began mediating a new round of indirect peace talks on Tuesday as both Israel and the Palestinians appeared to be heeding Washington's calls for goodwill gestures.

George Mitchell will shuttle between Israel and the West Bank for the first substantive sessions since the Palestinians agreed to the indirect proximity talks, which have been given a maximum of four months to produce results.

Though neither side is hopeful for a breakthrough, both seem to be taking trust-building steps.

Israeli Prime Minister Benjamin Netanyahu said this week his government is prepared to do things that are not simple, that are difficult.

Government sources said Netanyahu is favorably examining a proposal to expropriate land from Jewish settlers in the occupied West Bank to build a road between Ramallah and a new Palestinian town under construction.

Palestinian President Mahmoud Abbas broke with tradition on Monday by failing to give a speech on the day that Palestinians mourn the creation of Israel, which they call the Nekba, an Arabic word for catastrophe.

Analysts said he wanted to avoid an occasion in which he would be expected to condemn Israel in strong language.

The White House has said it will hold either side accountable for any actions taken that could undermine the negotiations.

The pledge appeared in part aimed at satisfying Abbas's fears that Israel's right-leaning government might announce further expansion of Jewish housing in and around Jerusalem.

Obama also urged Abbas to do all he can to prevent acts of incitement or delegitimization of Israel.

Mitchell will meet Israeli Defense Minister Ehud Barak in Tel Aviv later in the day, Barak's office said. He will then shuttle to Ramallah to meet Abbas on Wednesday. He is expected to meet with Netanyahu on Thursday.

Direct peace talks were suspended in late 2008. (Additional reporting by Ali Sawafta, Writing by Ari Rabinovitch; Editing by Charles Dick)