Margaret Thatcher promised last night to help the Palestinians to achieve self-determination, but she leaves Israel today without any sign that she has advanced the Middle East peace process significantly.

The prime minister went to the British Consulate in East Jerusalem to hear eight prominent political figures from the occupied West Bank and Gaza express their views on possible ways out of the present impasse in negotiations.

After several hours of informal talks over dinner they said she had been sympathetic to their complaints about the realities of Israel occupation. They made clear to her that they still consider the PLO as their sole legitimate representative and said they rejected terrorism.

British sources said the meeting had been friendly and constructive. Despite the lack of practical advance Mrs Thatcher apparently feels that she has further bolstered her reputation as an influential leader interested in resolving the Palestinian question.

It was further claimed, with some satisfaction, that the tone of the meeting had demonstrated that British support for the US raid against Libya had not caused the dramatic rift with the Arab world as a whole which some had predicted.

But the general air of satisfaction which followed the meeting did not conceal the considerable difficulties which Mrs Thatcher has found in identifying practical steps forward which are acceptable to the main parties at the heart of the Middle East dispute.

Although she had no specific plan for a peace initiative she was clearly anxious to hear at first-hand how established Palestinian leaders see the way forward. Her anxiety had been intensified by an unproductive meeting with Mr Yitzhah Rabin, the Israeli Defence Minister, whose responsibilities include administration of the occupied territories.

Mr Rabin said that the talks had been cordial but he made no secret of his differences with Mrs Thatcher over the best way of administering the territories. The prime minister said on Sunday that Israel could do more to improve the Palestinians’ standard of living and should show respect for their rights.

Mr Rabin, a former prime minister and a hawkish member of the Labour party, argued that Israel was already doing a great deal. He claimed that Israel’s fight against terrorism would help peace and benefit the Arab population.

He said: “I mentioned that Europe is doing very little on its own in helping to improve the standard of living and the quality of life. I wish that Europe would be more ready to improve the hygienic conditions of the refugee camps and to assist in the welfare of the people who reside in the West Bank and the Gaza Strip.”

From Mrs Thatcher’s point of view, the meeting was unproductive. Her suggestion that elections be held for mayors was firmly rejected on the grounds that such contests did not take place elsewhere in the Arab world.

Mr Rabin said it would be very strange if the first elections in the Arab world were held “under so-called Israeli military occupation.”

Mrs Thatcher has been having a generally successful visit in terms of the warmth of her reception. Her views have been given prominence in local newspapers and on the airwaves, but her efforts to show some progress towards peace have so far had little success.

As she headed for her meeting with the Palestinians she was still hoping that when she meets King Hussein of Jordan in London next month she will be able to contribute to a resumption of the peace process, but there seems no hope of an early specific initiative.

Israeli officials say that elections in the occupied territories would mean the emergence of pro-PLO figures and subsequent serious unrest. The last West Bank elections, in 1976, brought several radical Palestinians into power, but most municipalities are now administered by Israeli army officers or Arab appointees.

Israeli radio said that Mrs Thatcher also discussed with Mr Rabin the situation in South Lebanon and the danger of a war with Syria.

Just before she met the Palestinians Mrs Thatcher talked to the Defence and Foreign Affairs Committee of the Knesset. The chairman, Mr Abba Eban, told her that Israel’s peace treaty with Egypt was proof that a constructive dialogue could bring great rewards. Mrs Thatcher evidently felt that this was an encouraging remark.

Last night’s meeting at the British Consulate was not an official part of Mrs Thatcher’s three-day visit. Although the Israelis provided security cover, it was seen as a strictly British affair.

The invited Palestinians were carefully chosen from a cross-section of moderate leaders who would be acceptable as members of a Jordanian-Palestinian delegation on peace talks.

One of the guests at Mrs Thatcher’s reception last night was Mr Anatoly Scharansky, the former Soviet dissident. He thanked her profusely for supporting the campaign to win his right of emigration from the Soviet Union, which was successful earlier this year. He now lives in Israel.