Aso is on a regional tour which Tokyo has said aims to promote the peace process through economic means.
On Wednesday, besides Fayyad, Aso met Mahmoud Abbas, the Palestinian president, and held a four-way meeting in Jericho with Tzipi Livni, the Israeli foreign minister; Saeb Erekat, the chief Palestinian negotiator; and Abdul-Ilah al-Khatib, the Jordanian foreign minister.
|Aso, at left, with Palestinian, Israeli and|
Jordanian ministers in Jericho [AFP]
On the agenda will be a project for an agro-industrial park in Jericho that Japan is underwriting.
"This project will help create jobs for the Palestinians, boost their economy, build confidence with the Israelis and establish friendship between parties of the peace process," Aso said, speaking through a translator.
In talks with Livni, Aso urged Israel to ease the restrictions on movement that Israel has imposed in the occupied West Bank, citing security concerns, since the beginning of the second Palestinian uprising in 2000.
Japan, the world's second-largest economy and a major donor to the Middle East, will provide another $8m in humanitarian aid, the official said.
Japan suspended direct aid to the Palestinians in 2006 after Hamas formed a cabinet after sweeping a January parliamentary poll.
"Since the creation of the Palestinian Authority [in 1994], Japan has given a billion [dollars] and today we thank it for this new aid of 20 million dollars," Abbas told Aso during their meeting.
Abbas dismissed the Hamas-led unity government in June after the group overran his forces in the Gaza Strip. He later appointed a new cabinet headed by Fayyad, an economist.