Joseph Blatter, president of the FIFA (Photo: AP)
Blatter spoke after what he described as a "lively" and "historic" first meeting of the task force set up to deal with the dispute, attended by Israeli FA chairman Avi Luzon and his Palestinian counterpart Jibril Rajoub.
"At the start, I have to say it was very lively, I will not say any more, but at the end it was trust, and confidence, and football," Blatter told reporters at FIFA headquarters.
"We have given responsibility to the two associations to work together but we will monitor the different steps (stages)," he said.
"The idea is that, at the end of the year, when we come together at the FIFA executive committee, we will have a solution of how to make it easier for footballers to move in the region.
"We can say today was historic...it was the first time the two presidents spoke with each other, otherwise, even when they were at the FIFA Congress, they just looked at each other and moved away."
Palestinians say that Israel's security forces, who control movement between the Gaza Strip and the Israeli-occupied West Bank, frequently prevent athletes travelling freely between the two separated territories.
As a full member of FIFA and the Asian Football Confederation, the Palestinian FA has started to hold more regional tournaments but complains that Israelis are stopping athletes from third countries entering the West Bank.
At the FIFA Congress in June, Rajoub called for sanctions against the Israeli FA if the situation did not improve, and compared Israel's behaviour to bullying. Luzon, meanwhile, said no Palestinian travel requests had been rejected this year and that he did not understand what the problem was.
"The basic problem is the security problem of Israel and the fact that Palestine is recognised as a full member of FIFA but is not recognised as a full member of the United Nations," said Blatter.
"I asked everybody to come together; the solution would be one day that they play football together," he said.
"Already now, Arab players are playing in the Israeli league, Israeli girls are playing in the women's league in Palestine so there is a movement. I think this can be extended but it needs a little bit of time."
(For more sports news and updates, follow Ahram Online Sports on Twitter at @AO Sports and on Facebook at AhramOnlineSports)