EU commission chief Jose Manuel Barroso on Tuesday held talks with Israeli Prime Minister Benjamin Netanyahu on Iran's nuclear programme on the second day of his trip to Israel and the West Bank.

The two leaders "discussed the importance of expanding cooperation between Israel and Europe in all areas, Iran's effort to arm itself with nuclear weapons and the resumption of the peace talks with the Palestinians," Netanyahu's office said in a statement.

European Union officials said in a statement that the two leaders "also discussed the regional situation with president Barroso stating the EU's support for democratic change and political and economic reforms in the wider neighbourhood."

"They also discussed vital threats in the region and exchanged views on the on-going diplomatic process aimed at solving the nuclear issue on Iran," the EU statement added.

Israel, the sole if undeclared nuclear power in the Middle East, has said that Iran's nuclear programme poses an existential threat to the Jewish state, and that it will not rule out military action to halt Tehran's nuclear activity.

Barroso is in Israel and the Palestinian territories for a three-day visit that began yesterday with meetings in the West Bank with Palestinian president Mahmud Abbas and prime minister Salam Fayyad.

He is scheduled to meet Israeli President Shimon Peres later on Monday and will visit the northern Israeli city of Haifa on Tuesday to receive an honorary degree.

In his discussions on Sunday, Barroso urged Israel and the Palestinians to return to negotiations, warning that the peace process "cannot become an orphan of the Arab Spring."

Peace talks between Israel and the Palestinians have been on hold since late September 2010, when they ground to a halt over the issue of settlement construction.

The Palestinians want Israel to halt settlement activity and agree to base border discussions on the lines that existed before the 1967 Six-Day War.

Israel says it wants talks to resume without preconditions.