TEL AVIV(Reuters) - British Prime Minister Tony Blair met Israeli Prime Minister Benjamin Netanyahu on Tuesday to discuss the agenda for planned London talks next month to revive the stalled Middle East peace process. The two leaders met over breakfast in Tel Aviv. It was their second meeting of Blair`s visit to Israel and Palestinian Authority territory as part of a whistlestop Middle East tour. The United States issued a formal invitation to the May 4 London talks on Monday after Netanyahu and Palestinian President Yasser Arafat said they were ready to go to the British capital to discuss new U.S. proposals. The U.S. invitation coincided with talks Blair held with Arafat in Gaza on Monday. In Washington, U.S State Department spokesman James Rubin said Secretary of State Madeleine Albright would hold separate sessions with Arafat and Netanyahu in London to determine whether the new U.S. proposals could "provide a basis for a breakthrough". Despite the apparent progress, a rift immediately emerged over the structure of the talks and the role of the European Union. Arafat said he wanted a clear role for the EU, a major financier of the Palestinian governed territories. If he had his way, Britain - president of the EU until July - would have a key role in the talks as well as playing host. A senior Netanyahu aide, Cabinet Secretary Danny Naveh, bluntly told the Palestinians on Tuesday not to count on outside pressure on Israel to push peace moves forward. Israel has been cool about a mediation role for the EU, hich Israel believes harbours sympathies for the Palestinians and does not understand its overriding concern about security. For Britain`s part, it is prepared to play any role but has stressed it does not want to "cut across" U.S. efforts. Blair`s official spokesman said there would certainly be a role for Europe on economic issues, including the opening of Gaza airport and a new industrial zone in the area. The peace process has been stuck over the extent of a proposed Israeli troop pullback in the West Bank in return for Palestinian moves to combat Moslem militants. The United States is reported to have proposed a 13.1 ercent withdrawal, a figure Israel has called unacceptable. Netanyahu sprung a surprise on Sunday just hours after Blair arrived in Israel when he said he would be prepared to go anywhere, particularly in the next month, to help revive the peace process. The peace process ground to a halt last year amid Jewish settlement building on occupied Arab land and suicide bombings in Israel by Palestinian militants.