Portugal proposed on Tuesday that the European Union (EU) should urge Israel to end the Jewish settlement expansion, considered a "clear compromise" for peace.

The recent crisis in the Gaza Strip in Palestine "clearly showed that urgency on reactivating the peace process," Portuguese Foreign Minister Luis Amado said in a letter addressed to his EU counterparts.

Amado warned against the risk of losing the support from moderate Arab countries if the conflict between Palestinians and Israelis continues.

"Today we expect to see the end of the (Jewish) settlement expansion (in Palestine) in a clear compromise with the peace process or we will have to revaluate the ties," Amado said.

Amado suggested the EU set its posture before the new Israeli government takes office.

"The future Israeli government's policy to the peace process is not clear. For this reason we must give a strong message of our expectations," Amado said.

"In 2008, we did not see relevant progress on issues like the settlements... In the case of the settlements we saw exactly the contrary," Amado noted.

"The situation can not continue (like that), because we are on risks of losing the moderate Arab wing," he said.

Amado sent the letter to his counterparts of the other 26 EU countries, EU foreign and security policy chief Javier Solana and to European Commissioner for External Relations, Benita Ferrero-Waldner.