AL QUDS, Jan 11: Israeli Prime Minister Ariel Sharon phoned Mahmoud Abbas on Tuesday to congratulate him on his election as Palestinian president and offer cooperation, the highest-level contact between the sides in nearly four years.

But Palestinian militants resumed rocket and mortar fire at Jewish settlements in Gaza, signalling tough challenges ahead for the moderate Abbas and his call for a truce to help revive peace talks aimed at creating a Palestinian state.

Abbas's predecessor Yasser Arafat last spoke to Sharon by telephone in February 2001 to congratulate him on his election victory. With a Palestinian uprising raging, Sharon subsequently boycotted Arafat, calling him an "arch-terrorist".

Sharon's office said he spoke with Abbas for 10 minutes and welcomed his landslide election victory on a platform of non-violence. "He wished him success and the two agreed they would talk again soon," it said in a statement.

A senior government official quote Sharon as telling Abbas: "I am offering you our cooperation." He said Sharon and Abbas spoke about a meeting in general terms but no date was set.

Earlier Sharon told his cabinet he would seek coordination on security matters based on a Palestinian effort to "stop terrorism" against Israelis and added: "I believe there will be a meeting between us soon".

Maher Shalabi, an adviser to Abbas, said the two leaders talked about "ways to revive the peace process and about a meeting, which will be set up in the next few days".

A senior Israeli security source said Sharon was ready to turn over most occupied territory to Palestinian policing - meaning a halt to army raids and removal of checkpoints - if Abbas demonstrated "a 100 percent effort" to subdue militants. But while Abbas wants a cease fire, he has rejected Israeli demands to crush the militants, calling them "freedom fighters" whom he wants to integrate into the Palestinian mainstream.

Aides say Abbas would gain more leverage over militants if Israel stopped expanding settlements in the West Bank and proved it was ready to talk about a viable Palestinian state, not just security coordination to protect Israelis.

MILITANTS DEFY ABBAS: Abbas took 62.3 percent of the ballot in Sunday's election of a successor to Arafat, patriarch of the Palestinians' statehood struggle who died in November. But powerful Islamists boycotted the vote and refused to suspend attacks on Israel.