The foreign secretary has said Britain will go ahead with Tony Blair's Middle East conference.

Officials had been waiting for a response from Israeli prime minister Ariel Sharon in the hope he will lift a travel ban on members of the Palestinian Authority but no such move has been forthcoming.

Jack Straw said he regretted the Israeli decision, and announced that he would be holding a telephone conference with senior members of the Palestinian Authority and Palestinian civil society as a way to get round the travel ban.

Tony Blair, key Palestinians and international partners will aim "to give new momentum to Palestinian reform" at the conference, which will be held on Tuesday.

"We will help whenever we can to move the process forward and deliver security and justice for Palestinians and Israelis," said Straw.

Sharon added to the strained relations on Friday by again snubbing Britain's ambassador.

Downing Street revealed on that Ariel Sharon had again cancelled a meeting with the UK's ambassador to Israel, Sherard Cowper-Coles.

Relations with Tel Aviv had already reached a low ebb due to Tony Blair meeting with Sharon's political rival, Amram Mitzna, this week.

Number 10 again sought to talk down the growing row which was put down to the general election campaign currently underway in Israel.

"The pace of the Israeli election has been quite frantic over the last few days and we understand from the prime minister's office that he does want to see the ambassador personally to explain the Israeli government's position," said the official spokesman.

Officials were also forced to admit that the position on Israel's travel ban for senior members of the Palestinian Authority remained unchanged.

Despite Number 10's admission that Israel's position remained unchanged, officials made it clear that ways would be sought to proceed with the conference.

"We are committed to dialogue going ahead in some form as soon as possible," said the official spokesman.

"Israel's position remains unchanged but we are equally committed to continuing the process of dialogue with the Palestinians."

It is expected that representatives from Egypt, Jordan and Saudi Arabia will still attend the event in London next week..

Britain played down the Israeli snub as being due to "election pressures".

Amid the latest row, Blair held controversial talks with the leader of Israel's opposition Labour Party on Thursday.

Amram Mitzna was in Downing Street for a meeting that is said to have angered senior figures in Tel Aviv's right-wing Likud government, coming as it does in the run up to the Israeli general election on January 28.

"We spent an hour discussing the situation in Israel," said the Israeli politician.

"We exchanged our opinions about how to proceed, how to try to end the conflict in the Middle East.

"And we both agreed that there is a necessity to resume negotiations side by side with fighting terrorism with all the powers that are needed to fight terrorism, but on the other hand to try again, to give another chance to resume negotiations in order to come to an agreement."

Mitzna told reporters that he understood why Sharon had banned Palestinian leaders from travelling to London.

"I can understand why prime minister Sharon has taken such a decision after the terrorist attack in Tel Aviv just a few days ago," he said.

"It's very difficult to explain how to back Palestinians who are not even trying to fight terrorism.''

The official spokesman pointed out that the meeting "should not be seen as anything out of the ordinary" and that in 1999 the prime minister had met with then opposition leader Ehud Barak.

In addition to the stalled peace process and continuing bloodshed in both Israel and the occupied territories, the talks take place at a time of strained relations between the UK and Israel.

Earlier this week, news that the Israeli government would stop Palestinian representatives travelling to London prompted disagreements at the highest levels.

Israel took the unusual step of releasing a transcript of a telephone conversation between Jack Straw and his Israeli opposite number, Benjamin Netanyahu.

According to the transcript, Netanyahu told the foreign secretary that the latest suicide bombings in Tel Aviv, which killed 23 people and two terrorists, ruled out any chance of business as usual.

He called on Britain to adopt the same position as US president George W Bush "that leaders compromised by terror cannot be partners for peace".

"You in Britain are doing the exact opposite," Netanyahu is said to have claimed.

Straw apparently replied: "No, it is Israel that is doing the opposite. Instead of concentrating on dealing with terrorism, it is striking at [Palestinian] delegates."

Speaking in the Commons on Wednesday, the prime minister condemned the latest "appalling carnage...and barbarous and wicked murder of innocent Israeli civilians".

Blair insisted the only way to end the suffering on both sides was to "get a proper peace process under way".

"We have a situation in which the dreadful and tragic irony is that there is agreement in the international community that the only viable solution is a two-state solution, an Israeli state and a viable Palestinian state, and therefore the longer we delay the process of getting back into peace negotiations the more fraught the situation becomes," he told MPs.

Blair said he would welcome the Israeli Labour leader to Number 10, but, aware of the sensitivities surrounding the visit, was at pains to point out that he was not seeking to intervene in the country's general election.

"I would point out also that of course it is my practice whether they are Labour or Conservative politicians to meet the opposition politicians in different countries.

"This is in accordance with normal practice and I believe it is important that we continue to engage with Israeli politicians at every level and in every political party," the PM explained to the Commons.

Mitzna has pledged to reopen talks with the Palestinians if he wins the election, but polls suggest he is trailing Ariel Sharon despite economic problems and a Likud bribery scandal.