JERUSALEM - Efforts to revive the Middle East peace process took another blow on Tuesday after Palestinian president Mahmud Abbas accused settlers of torching a West Bank mosque as the US envoy arrived in the region.

The flare-up occurred just hours after George Mitchell arrived in Israel to finalise preparations for a new round of peace talks between Israel and the Palestinians that were called off two months ago due to a bitter row over settlement building.

The US envoy's return came as both sides were poised to start their so-called "proximity talks" -- indirect negotiations aimed at kickstarting the peace process which broke down 18 months ago.

The mosque, located in the northern West Bank town of Lubban ash-Sharqiya, went up in flames in the early hours of Tuesday morning in an attack blamed on radical Jewish settlers in the area.

"President Abbas condemns the burning of the mosque in Lubban ash-Sharqiya by extremist settlers and said the responsibility for this criminal attack lies with the Israeli government because the Israeli army protects the settlers," his office said.

"This criminal attack threatens efforts to revive the peace process."

But Israeli investigators said they were looking into the possibility that the blaze may have been caused by a short circuit.

Mitchell's arrival in the region had been widely expected to herald the launch of the proximity talks, ahead of which there has been a flurry of top-level diplomacy.

On Monday, Israeli Prime Minister Benjamin Netanyahu met Egyptian President Hosni Mubarak in the Red Sea resort of Sharm el-Sheikh for talks focused on the resumption of indirect talks.

And later in the day, US President Barack Obama telephoned the Israeli leader to personally hammer home the urgent need for fresh talks with the Palestinians.

During his 20-minute conversation with Netanyahu, Obama pressed the importance of "substantive" proximity talks between the two sides, and on the need for direct contacts to start soon, White House spokesman Robert Gibbs said.

Mitchell is due to meet Netanyahu on Wednesday and Abbas on Friday in the hope of getting the two sides to begin indirect talks, after direct negotiations were halted 18 months ago when Israel launched a devastating 22-day military offensive in the Gaza Strip.

The Palestinians had agreed in March to take part in the proximity talks but pulled out after Israel announced plans to build 1,600 homes in annexed Arab east Jerusalem.

The deeply controversial move angered Washington and came as US Vice President Joe Biden was in the region to promote the negotiations.

Abbas, who is currently in Saudi Arabia, is also due to meet Mubarak in Egypt on Wednesday before returning to the West Bank the following day.

After Abbas's meeting with Mitchell, the Palestine Liberation Organisation is expected to meet on Saturday to endorse the resumption of indirect negotiations, top Palestinian negotiator Saeb Erakat said earlier this week.

The Palestinians only agreed to return to the negotiating table after receiving US assurances the east Jerusalem plans would be shelved, after which the Arab League gave the green light for the indirect talks to go ahead.

Israel has limited settlement construction in the West Bank, but the 10-month moratorium adopted in November does not include east Jerusalem, occupied and annexed in 1967 in a move not recognised by the international community.

The Palestinians want the West Bank and Gaza for a future state, with east Jerusalem as its capital.

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