A meeting between Israeli Prime Minister Ehud Olmert and Palestinian President Mahmoud Abbas was postponed at the Palestinians' request, Olmert's Office said on Wednesday.
According to the prime minister's office, the main divergence of the two sides was the Palestinian taxes, which were withheld by Israel.
Media reports quoted chief Palestinian negotiator Saeb Erekat as saying that Israel refused the Palestinian's request for the releasing of the taxes.
Other Palestinian officials said Israel was also unwilling to accept a Palestinian demand to revive the ceasefire in the Gaza Strip on condition that it is extended to the West Bank.
Abbas said on May 29 that he will meet Olmert on Thursday.