The ministers' statement followed a call from Palestinian leader Mahmoud Abbas for the EU to recognise Palestine based on the 1967 borders.

The EU ministers emphasised the need for a negotiated settlement between Israel and the Palestinians.

Brazil and Argentina recently joined the growing number of countries to recognise Palestine.

More than 100 states around the world recognise Palestine, their mission at the United Nations says.

Collapsed talks
The Palestinian chief negotiator, Saeb Erekat, said Mr Abbas spoke to EU foreign policy chief Catherine Ashton earlier on Monday.

"[Catherine] Ashton spoke today with President Abbas who called on the EU to take a step towards recognition of the state of Palestine based on the 1967 borders," Mr Erekat said.

Israel occupied the West Bank and the Gaza Strip during the 1967 war. It withdrew its troops from Gaza in 2005.

Direct talks aimed at finding a solution to the Israeli-Palestinian conflict collapsed in late September after just a few weeks over the issue of Israeli settlement building in occupied Palestinian territories.

The Palestinians have said there is no point in direct negotiations without a freeze in settlement building.

They have been making behind-the-scenes diplomatic moves to secure unilateral recognition since the talks stalled.

The EU foreign policy council "reiterates its readiness, when appropriate, to recognise a Palestinian state", the European foreign ministers' statement said.

They added: "Urgent progress is needed towards a two-state solution to the Israeli-Palestinian conflict."

The statement also said the ministers were disappointed that Israel did not extend its settlement freeze.

"Our views on settlements, including in East Jerusalem, are clear: they are illegal under international law and an obstacle to peace."