At the meeting with Mohammed Dahlan on Saturday, the two discussed the Gaza pullout and the financial aid pledged to the Palestinian Authority by the Group of Eight industrialised nations.
Speaking to reporters after the meeting, Wolfensohn said they had discussed the formulation of a plan for using the promised $3 billion package that was announced on Friday by British Prime Minister Tony Blair after the three-day G8 summit in Scotland.
Wolfensohn, who began a six-day visit to the region, described his meeting with Dahlan as "a very pragmatic and frank discussion" that dealt with all aspects of social and economic matters.
"I was asked by the G8 to come back (at the end of September) with a plan devised with the Palestinian Authority (PA) for this economic support," he said.
"We are looking very carefully at tangible evidence that will be shown to the Palestinian people a day after the withdrawal," he said. "We're talking about programmes which will be implemented immediately." 

Aiding Palestinians
He said he would be working closely with the PA to develop a plan that would be put to the G8 and other members of the international community. 

Israel is to pull out of Gaza
settlements  by mid-August

Commenting on Israel's forthcoming evacuation of all troops and over 8000 Jewish settlers from Gaza that is to start in mid-August, Wolfensohn said the withdrawal should be within the framework of the Middle East peace road map.
"The G8's support and great interest at this particular moment in time is in supporting and taking steps towards the withdrawal in the context of the road map and a two-state solution," he said.

He said it was important for Israel and the Palestinians to put aside their differences and find "a rational solution" to the problems facing them.
Dahlan said one of the problems for the PA was that it was still waiting for Israel to take a series of decisions related to the withdrawal.
Wolfensohn will meet with top Israeli and Palestinian officials to focus on six areas that require coordination, a statement from his office said. 

Thrust areas
They include: border crossings and trade corridors, connection of the West Bank and Gaza Strip, freedom of movement in the West Bank, the establishment of an airport and sea ports in Gaza, the houses that will be evacuated by the Gaza settlers and the settlers' greenhouses.
He was also to work with the Palestinians on three key economic and developmental issues: resolution of the PA's fiscal crisis and establishment of a new social safety net programme; a package of "rapid impact" initiatives for dealing with unemployment immediately after the withdrawal and a three-year plan for Palestinian development.

The former World Bank chief was appointed by US President George Bush as the "disengagement envoy" of the Middle East quartet, which groups diplomats from the United States, Russia, the European Union and United Nations.