"We cannot resume indirect negotiations as long as Israel maintains its settlement policy and the status quo," Abbas said at the opening of a two-day Arab summit in the Libyan city of Sirte on Saturday.
Abbas demands 'complete halt'
Abbas demanded a "complete halt to all Israeli practices", particularly in annexed east Jerusalem, the sector which the Palestinians want as the capital of their future state.
UN chief Ban Ki-moon, also in a speech at Sirte, earlier urged Arab leaders to help facilitate indirect "proximity" talks and stressed that Jerusalem "should emerge from negotiations as the capital of two states".
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Israel angered many in the world community when it announced plans earlier this month to build 1600 new homes for Jewish settlers in mainly Arab east Jerusalem.
Abbas went on to accuse Israel of trying to alter the identify of Jerusalem with "ethnic cleansing on a daily basis" and warned that such practices would lead to "wars in the region".
"We have always said that we will hold onto every grain of soil and every stone in Jerusalem, and we are determined to support the resistance of our people in Jerusalem," he said.
"And there won't be any (peace) agreement that does not guarantee an end to the occupation, starting with Jerusalem, because there is no sense in having a Palestinian state that does not have Jerusalem as its capital."
He appealed to Arab leaders to help "rescue" Jerusalem, using a slogan that has become the summit's rallying call.
