The Palestinian economy has suffered during the intifada

The meeting, hosted by the European Union, is seeking to tackle a growing humanitarian crisis in the area.

They also want to reverse the rapid decline of an economy which has been badly hit by Israeli border closures.

The Palestinian Authority is expected to seek $1.2bn in aid and answer donor concerns about its management, says the BBC's Frances Kennedy in Rome.

Sides responsible

Representatives of 14 countries and international organisations - including the sponsors of the "roadmap" peace plan, the EU, the United Nations, the United States and Russia - are attending the conference.

Opening the event, Italian Foreign Minister Franco Frattini - the current EU president - said they expected better results from the Palestinians on economic reform.

I think it's a pressure for both of us... to seek ways and means of ending the confrontation, and that's what we are doing Nabil Shaath Palestinian Foreign Minister

He urged Israel to ease its military presence in the Palestinian territories, and the Palestinians to end their attacks on Israelis.

Mr Frattini said the barrier being built by Israel through the West Bank was a threat to peace and was causing renewed suffering among Palestinians.

But militant Palestinian groups, for their part, must end their attacks on Israel, he added.

"The truth is that both sides must do better, to ensure for donors both a secure operating environment and the freedom to operate," William Burns, a US Mid-East envoy said.

The Palestinian delegation is headed by Foreign Minister Nabil Shaath.

Mr Shaath said the international community's impatience with the continued confrontation was "very evident".

"I think it's a pressure for both of us... to seek ways and means of ending the confrontation, and that's what we are doing."

Dire

The international aid will be needed to finance new projects and cover a deficit said to run to hundreds of millions of dollars.

Israel's Foreign Minister Silvan Shalom told Italian television that he would unveil positive measures at the Rome meeting, indicating Israel could evacuate illegally built settlements.

Italy is keen to play a key role in the Middle East peace process, our correspondent says.

Several years ago, Prime Minister Silvio Berlusconi floated the idea of a Marshall plan for the Palestinians, along the lines which the US used to help Europe after World War Two.

Relief organisations like the Red Cross say the humanitarian and health situation is dire and they are struggling to fund emergency food programmes.

Last month, the Red Cross said it was ending two emergency aid programmes that supported roughly 50,000 West Bank Palestinian families.

The agency set up the aid programmes as temporary measures 18 months ago but said it could not maintain them indefinitely.