Israel has agreed to ease severe travel and trade restrictions on Palestinians in the occupied West Bank, the Middle East envoy Tony Blair said today.

In an announcement aimed at bolstering forthcoming peace talks between Israel and the Palestinians, Blair described the breakthrough as a "significant first step".

The news came on the eve of a visit by the US president, George Bush, to Israel to celebrate its 60th anniversary.

The agreement will see Israel scrap one checkpoint near the West Bank city of Hebron this week and remove or relocate several others, including a crossing at Beit El, near Ramallah.

"This is a first step but it is a significant first step," Blair told a news conference. "It will make a marked improvement."

He claimed the changes would over time "significantly" improve north-south and east-west movement within the West Bank.

The Beit El checkpoint would be moved "once Israel determines the security situation so allows", Blair said. Israeli officials had no immediate comment.

Blair had presented Israel with a list of 12 checkpoints, roadblocks and other barriers in the West Bank that he wanted to be removed.

The list was the first of its kind presented by the former British prime minister since he was appointed last June to spearhead efforts to revive the Palestinian economy.

Israeli restrictions in the West Bank, which include a network of hundreds of checkpoints and roadblocks, have had an enormously damaging impact on the territory's economy.

Palestinians claim the tactic amounts to collective punishment while also serving to undermine support for the Palestinian president, Mahmoud Abbas.

The World Bank has warned that per capita income in the West Bank could shrink because of Israel's restrictions.

Israeli officials, however, have long balked at proposals to remove major checkpoints, arguing they are a necessary step to prevent suicide bombers entering its cities.

Negotiations had shown little sign of progress despite the start of US-backed peace talks last November between Abbas and the Israeli prime minister, Ehud Olmert.

After a recent visit by the US secretary of state, Condoleezza Rice, Israel did announce plans to remove 61 barriers in the West Bank. But a UN survey subsequently found that only 44 of the 61 obstacles had been scrapped, and most of them were of little or no significance.