Pope Francis told the Israeli and Palestinian presidents that they "must respond" to their people's yearning for peace in the Middle East and find "the strength to persevere in undaunted dialogue".
The pope made his appeal to Shimon Peres and Mahmoud Abbas at the end of an unprecedented prayer meeting among Jews, Christians and Muslims in the Vatican gardens that marked the first time the two presidents have met in public in more than a year.
The Israeli and Palestinian presidents said they have accepted Pope Francis' invitation to meet with him at the Vatican, the Associated Press reports:
BREAKING: Israeli, Palestinian presidents confirm they will meet Pope Francis at the Vatican next month.
Earlier Pope Francis offered his "home in the Vatican as a place for this encounter of prayer."
Israel's prime minister has criticised Palestinian leader Mahmoud Abbas, saying that he could not say the Holocaust was "terrible" while attempting to seek the "destruction of Jewish people".
Mr Abbas commented earlier calling the Holocaust "the ugliest crime humanity has known in modern history", according to state media agency WAFA. Mr Netanyahu said he would not negotiate with a government that was "backed by Hamas".
Palestinian President Mahmoud Abbas has called the Holocaust "the ugliest crime humanity has known in modern history", according to the Associated Press.
His comments, reportedly published by the Palestinian official news agency WAFA, marked a rare acknowledgment by an Arab leader of Jewish suffering during the Nazi genocide.
Abbas' comments were published just hours before Israel's annual memorial for Holocaust victims, in which some six million Jews perished.
Labour leader Ed Miliband has condemned the expansion of Israeli settlements on the Palestinian West Bank and warned they pose a "mortal threat" to hopes of securing a two-state solution to the decades-old conflict.
Mr Miliband, who is an atheist of Jewish descent, said he was a supporter of "the homeland for the Jewish people" but has made clear he does not give blanket backing to the actions of the Israeli government.
The Labour leader made his strongest criticism yet during a visit to the Middle East, blasting the policy as "wrong and illegal."
The Labour leader said: "What I have seen today shows that the expansion of Israeli settlements on the Palestinian West Bank is not only wrong and illegal but represents a mortal threat to the two-state solution and to a successful outcome of the peace process."
He is on the last leg of a three-day visit and will stay overnight in Ramallah, in central West Bank, tonight - the first leading British politician to be able to do so as a result of improved security conditions.
Israel has cancelled its last release of Palestinian prisoners because of the Palestinians' push for recognition at the United States, Israel's chief negotiator said. Tzipiz Livni said the decision to seek accessions through the UN violated the terms set for the prisoners' release.
The impasses over the prisoners throws further doubts about the outcome of the US-led peace negotiations. The talks had been scheduled to last until the end of the month, but both sides appear to be wavering.
For the families of those Palestinians due for release, the decision brings fresh heartache as their hopes are dashed at the last minute. Middle East Correspondent Geraint Vincent reports.
The Israeli army says it has seized a large shipment of munitions being sent from Iran to Palestinian groups on the Gaza Strip.
An Israeli Defence Forces Twitter account shared the following images:
Aid workers have released startling pictures of queues for humanitarian parcels in a Palestinian refugee camp in Damascus, Syria.Read the full story ›
The Prime Minister has cancelled his trip to Israel and Palestine scheduled for next week.
In a press conference David Cameron said: "Nothing is more important than dealing with these floods."
Palestinians in Gaza and the West Bank celebrated the death of former Israeli Prime Minister Ariel Sharon on Saturday.
In Gaza, crowds gathered to burn pictures of Sharon, and hand out sweets.
Women ululated while others stamped a photograph of Sharon into the ground.