He had a working dinner last night with Israel's prime minister, Ehud Olmert, and was due to leave early today.
Blair is to return in early September and hopes to have an office in place in Jerusalem for a full time staff. His spokesman said conversations about office space at a UN complex are at an early stage, and that Blair plans to spend about one week every month in the area.
"I think there is a sense of possibility, but whether that sense of possibility can be translated into something, that is something that needs to be worked at and thought about over time," Blair said after meeting with Israel's president, Shimon Peres.
Peres, speaking at Blair's side, added a note of caution to his own optimism. "I feel there is a serious window of opportunity to advance peace. I don't know the duration of this opportunity. I am afraid it is not too long."
Blair has been tasked by the Quartet -- the United States, European Union, United Nations, and Russia -- to foster a stable, economically strong West Bank government that could lead Palestinians into statehood. He has also been advised to leave Arab-Israeli political issues alone.
But Palestinian leaders told Blair that politics cannot easily be separated from economics, officials said, speaking on condition of anonymity because they were not authorized to brief the media. President Mahmoud Abbas and his pro-Western prime minister, Salam Fayyad, urged him to push a political agenda that would help restart direct talks with Israel.
