A spokesman for Olmert's Kadima party quoted the prime minister as saying negotiators would tackle less sensitive subjects before discussing the fate of Jeruaslem.
"The negotiations with the Palestinians will deal with all issues. That doesn't mean that it will deal with all issues at once and with the same intensity," Kadima spokesman Shmuel Dahan quoted Olmert as saying after the party's weekly meeting.
"The issue of Jerusalem is very sensitive and in this regard it is preferable to begin with issues that have a chance of achieving understanding rather than starting with issues where the disagreements initially are large."
Israel and the Palestinians have pledged to tackle "core issues" Such as borders, the fate of Palestinian refugees and the future of Jerusalem with a goal of reaching a deal before US President George W. Bush leaves office in early 2009.
Sceptics say that timetable is too ambitious, given that Olmert's right-wing coalition partners oppose ceding land to the Palestinians and Hamas Islamists hostile to Abbas and Israel control the Gaza Strip.
One party, Yisrael Beiteinu, quit Olmert's government this month over the peace talks and another, Shas, has said it will pull out if negotiators discuss Jerusalem.
Olmert's deputy, Haim Ramon, has said Israel should be prepared to hand over Arab neighborhoods of Jerusalem under a peace deal.