Israel and the Palestinian Authority decided to resume economic cooperation suspended by the Jewish state last year, at a meeting of their finance ministers on Sunday.
The Israeli finance ministry, announcing the agreement as host of the Jerusalem talks, said newly appointed Palestinian minister Shukri Bishara met Israel's Yair Lapid, who took office in March.
They discussed "the implementation of confidence-building measures", it said, and a timetable was laid down after the meeting to renew economic ties between Israel and the Palestinians.
The initial aim is to relaunch regular meetings on technical issues such as crossing points; fuel, power and water supplies to the Palestinians; and payment for treatment of Palestinians in Israeli hospitals, the Palestinians said.
Israel halted the meetings in November after the United Nations General Assembly upgraded the Palestinians' membership status over stiff objections from both Israel and the United States.
Lapid said economic cooperation would benefit both sides.
"There are problems concerning daily life for Palestinians that must be coordinated and followed up with Israeli occupation authorities," Palestinian negotiator Saeb Erakat said on Voice of Palestine radio.