The meeting, they hope, will help normalise bilateral relations.
"Pakistan gives great importance to the developments in Israel and the Gaza Strip," Kasuri told reporters after the talks at a top hotel in Istanbul.
"Pakistan has therefore decided to engage with Israel," he said, without elaborating.
Shalom, for his part, said the meeting heralded a new era in bilateral ties.
"This is a historic meeting," the Israeli minister said. "We see this meeting as the beginning of a new period, the beginning of open and useful mutual relations."
He hailed the "courage" of Pakistani President Pervez Musharraf in "supporting peace between Israel and the Muslim World".
Delegation to al-Quds
Later on Thursday, Musharraf said he was planning to send a delegation to Israel following the talks in Ankara.
He said Pakistan would send a delegation to al-Quds (Jerusalem), "where it will be welcomed by Palestinians and Israelis", but gave no further details.
Speaking in the southwestern Pakistani city of Quetta, Musharraf said Islamabad would not recognise Israel until it resolved the Palestinian issue.
Nabil Shaath (L): It is not a good
time to start relations with Israel
The Palestinian Authority on Thursday said it was "worried" about Pakistan's first high-level diplomatic contact with Israel, which still occupies East Jerusalem and the West Bank.
"It is not good to give Israel gifts before it really implements the peace process, not only in Gaza, but also in the West Bank and Jerusalem," Palestinian Deputy Prime Minister and Information Minister Nabil Shaath told Aljazeera.
"We are worried about this because it is not a good time to start relations with Israel.
"The right time for this relationship with Israel should be after Israel withdrawal from all lands occupied in 1967 and after solving of the refugees issue," Shaath added.
An Israeli diplomatic source said Shalom and Kasuri were hoping to "normalise ties" in a bid to set up diplomatic relations.
"It is premature to speak about establishing diplomatic relations, but it is definitely a step towards normalisation of relations," the spokeswoman for the Israeli embassy, Sharon Bar-Li Saar, said.
"We see this meeting as the beginning of a new period, the beginning of open and useful mutual relations"
Israeli Foreign Minister
Israel currently has full diplomatic relations with only three Arab states - Mauritania, Egypt and Jordan - and a handful of Muslim majority states including Turkey.The meeting between Kasuri and Shalom took place in a hotel in Istanbul.
It has been hoping that the historic pullout of troops and settlers from the Gaza Strip would help bridge the gap with the Arab and Muslim world.
The meeting was arranged at the initiative of Pakistan President General Pervez Musharraf who asked Turkish leader Recep Tayyip Erdogan to arrange it, said Israeli Foreign Ministry officials.
"There is no conflict whatsoever between Israel and Pakistan and no logical reason why the two countries could not have a constructive and positive bilateral relationship," said Foreign Ministry spokesman Mark Regev on Thursday.
Pakistan has in the past taken a hard line against Israel but was encouraged to meet the Israelis following Israel's withdrawal of Jewish settlers from the Gaza Strip, which was completed last week, the Israeli officials said.
Musharraf is a key US ally in the
In Islamabad, The Dawn newspaper said the Istanbul meeting was taking place "in response to Israel's keenness to establish contact with Pakistan".
The two countries - which don't have diplomatic ties - decided to hold the meeting in Turkey because it is a "neutral" country, Dawn said.
Pakistan backs the Palestinians for an independent state, and demands that Israel withdraw from occupied Palestinian territories.
Representatives from Israel and Pakistan had been secretly holding talks for the past several months through diplomatic and "informal channels," with Pakistan insisting it would wait for an appropriate time to make the overtures public, Dawn said.
"After the Israeli pullout from Gaza, Pakistan signalled to the Israelis that it was 'now ready' for an overt contact"
"After the Israeli pullout from Gaza, Pakistan signalled to the Israelis that it was 'now ready' for an overt contact," the English-language newspaper said.
President General Pervez Musharraf, a key US ally in its "war on terror", has angered Pakistan's Islamist opposition groups by calling for a debate on whether Islamabad should recognise the Jewish state.
Musharraf is also expected to speak at a Jewish interfaith conference in New York later this month.
The Foreign Ministry has said that Musharraf's participation in the meeting in New York, organised by the Council for World Jewry, a leading US-based Jewish organisation, should not be seen as a move by Pakistan to recognise Israel.
Aljazeera's Ankara correspondent Yousif al-Sharif reported that the Turkish foreign ministry had denied any role in arranging the meeting. Turkish officials even expressed surprise at Istanbul being the location for the meeting.
Israeli embassy sources in Ankara told Aljazeera that the meeting took place in Istanbul as both sides were heading to New York for the UN general assembly. As Istanbul was on the way, it was chosen as the venue, the sources said.
Silvan Shalom said the meeting
heralded a new era
Turkey had tried to bring about relations between Israel and Pakistan three years ago when a settlement to the Palestinian conflict seemed imminent. But Ankara had no role now, officials said.
To show it had no role, the Turkish official news agency did not put out any report about this meeting beforehand.
Furthermore, no Turkish officials were present at the meeting, Aljazeera reported.
Aljazeera's correspondent in Islamabad Ahmed Zaidan said the meeting was an outcome of secret meetings between Pakistan and Israel. Pakistan perceived relations with Israel as a means to neutralise the advantage India had by having ties to Israel.
Pakistan also viewed the relationship as vital to gain the support of the Jewish lobby in the US as it would result in better relations with Washington.
In Ram Allah, Aljazeera correspondent Walid al-Omari reported that Israeli officials were tight-lipped about the meeting.
Israel's foreign minister said a few days ago that after the Gaza disengagement, Israel was set to build relationships with several Arab and Islamic countries including Pakistan and Malaysia, reported al-Omari.
Former Pakistan Prime Minister Nawaz Sharif too had said he had no objections in his country establishing relations with Israel, the Aljazeera correspondent said.