"The news story circulated by Israeli and Qatari media recently over contacts between Saudi and Israeli officials is utterly false," said the SPA state-owned news agency, quoting a foreign ministry official.

"The story is completely fabricated," added the official who was not named.

Israel's mass-selling paper Yediot Ahranot reported Monday that Prime Minister Olmert had held an unprecedented meeting recently with an "extremely" senior figure in the Saudi royal house.

It quoted an official as saying that the Saudi figure was King Abdullah himself.

Al-Jazeera pan-Arab news channel -- based in Qatar which has tense relations with neighbouring Saudi Arabia -- had also broadcast the report.

Olmert himself poured cold water on the report on Monday, telling the Y-net news website: "I did not meet with the Saudi king and I did not meet with any element which should have caused a sensation in the press."

Last week, Yediot reported that Israel and Saudi Arabia had been conducting secret negotiations, saying contacts had begun during the July-August 34-day war in Lebanon between Israel and Shiite militant group Hezbollah.

The Saudi official quoted by SPA said that "the kingdom plays its national and (Arab) nationalistic role clearly and transparently" and does not have "undeclared policies".

"Its position (on) the Palestinian issue was defined in the (Saudi) peace initiative which was adopted in the Arab summit in Beirut in 2002," he added.

Under the Saudi initiative, the Arab world would normalise relations with Israel in exchange for a withdrawal from all land occupied since 1967 and a negotiated solution to the Palestinian refugee issue.