Mathias Eick, the EU mission spokesman, said: "Time is of the essence. We have been given indications by the EC (European Commission) that they will need two weeks to prepare whatever solution is offered, so it would be good to have a final decision.
"Our basic position is [that this should come] as soon as possible."
Eick said the EU mission had no official contact with the Israeli government since Ariel Sharon, the country's prime minister, suffered a stroke late on Wednesday, all but paralysing the authorities from taking major policy decisions.
Eick said: "The issue is can both sides agree in time? That is the question that would allow people to cast their vote in east Jerusalem.
"We hoped that there would have been a decision by now. We believe, however, that despite the illness of Ariel Sharon the Israeli government will be able to provide an answer in the very near future."
Mahmoud Abbas, the Palestinian leader, has vowed to cancel the 25 January election unless residents of east Jerusalem can join the democratic process, a threat repeated by Ahmed Quraei, the prime minister.
"The issue is, can both sides agree in time? That is the question that would allow people to cast their vote in east Jerusalem"
EU mission spokesman
Washington has also counselled Abbas against delaying the election.
Israeli police stopped two leading candidates from canvassing in occupied east Jerusalem on the first day of campaigning last Tuesday.
Observers asked to leave
Followers of the Al-Aqsa Martyrs' Brigades have ordered foreign observers overseeing the election to leave the Jenin area of the northern West Bank.
In a statement the group said: "We are sorry to tell you that you must leave Jenin as soon as possible.
"We ask you to understand that this step is not against you. It is against the occupation and against the international community which has done nothing to stop the Israeli army's escalations against our people."
The Al-Aqsa Brigades, a group of largely autonomous cells nominally loyal to the ruling Fatah movement, have previously threatened to kidnap monitors in the Gaza Strip unless a series of demands are met, including guarantees that elections take place in east Jerusalem on 25 January.
Al-Aqsa Martyrs' Brigades have
ordered foreign observers to leave
Eick said there were eight EU election monitors based in Jenin, although he had no immediate information about the threat.
Meanwhile, an armed group of freed Palestinian prisoners attempted to storm the headquarters of the Executive Committee of the Palestine Liberation Organisation (PLO) in Gaza City, Aljazeera reported.
Quoting Palestinian security sources, Aljazeera's correspondent said Palestinian security and police forces confronted them and foiled their attempt.
The group demanded the payment of their outstanding dues.
AFP reported a Palestinian was killed in the clashes and three others injured.
Medical sources at the main hospital in Gaza City confirmed that one person was killed and three others injured.
The identities of the victims were not immediately clear, but security sources said that the dead man was neither a gunman nor a police officer.
Persistent security chaos in the Gaza Strip has worsened since Israel withdrew all troops and settlers from the Palestinian territory in September following a 38-year occupation.