|The status of Jerusalem is one of the most contentious issues to resolve|
Israeli and Palestinian negotiators will resume peace talks in Jerusalem on Wednesday, according to the US state department.
The negotiations restarted last month in Washington under US mediation.
The announcement came as Israel approved the release of more than 100 Palestinian prisoners.
US Secretary of State John Kerry has made six official visits to the Middle East in the previous five months, in an effort to revive the talks.
"Negotiations between the Israelis and Palestinians will be resuming 14 August in Jerusalem and will be followed by a meeting in Jericho," Reuters quoted state department spokeswoman Jen Psaki as saying.
Mr Kerry described the first meeting on 30 July, which saw leaders break the traditional Muslim fast for Ramadan, as a "very, very special" moment.
Jerusalem: Palestinians want East Jerusalem as capital of future state; Israel unwilling to divide it
Borders and settlements: Israel wants to keep major Jewish settlements; Palestinians want borders along 1967 lines, do not accept Jewish settlements
Palestinian refugees: Israel rejects idea of a Palestinian "right of return"
Security: Israel wants final arrangement which will meet its security needs; Palestinians want state to have security from Israeli military action and not have sovereignty compromised
Mid-East talks: Where they stand
He earlier urged both sides to make "reasonable compromises" for peace.
"I know the negotiations are going to be tough, but I also know the consequences of not trying will be worse," he said.
The prison releases, which split the Israeli cabinet, are to take place in stages over several months.
Their identities have not been published, but according to reports they include those who have killed Israelis or Palestinian informers.
The Israeli cabinet also approved a draft bill requiring a referendum for any peace agreement with the Palestinians that involves territorial concessions.
Thursday's announcement comes despite Israeli approval of around 1,000 new homes in Jewish settlements on the West Bank.
The future of Israeli settlements on the West Bank is among the key sticking points for the negotiations, along with the status of Jerusalem and the fate of Palestinian refugees.
The issue of settlement-building halted the last direct talks in September 2010.
Settlements are considered illegal under international law, although Israel disputes this.