ZURICH, Aug 26 (Reuters) - A new FIFA committee began its attempt to settle the dispute between the Israeli and Palestinian football federations when it met for the first time on Wednesday, soccer's world governing body said.

The meeting was chaired by South African businessman and former political prisoner Tokyo Sexwale, who said that both sides had confirmed their intention to promote a dialogue.

The committee was set up following a heated exchange at the FIFA Congress in May, when the Palestinian Football Association (PFA) unexpectedly dropped its proposal to have Israel banned from international soccer.

The PFA has complained of anti-Arab racism in the Israeli game and accused Israel of hampering its activities and restricting the movement of players between the Israeli-occupied West Bank and Gaza Strip.

Israel cites security concerns for the restrictions, and the country's football association (IFA) has argued that it has no control over such matters. FIFA has been trying to settle the matter for more than two years.

One of the committee's tasks will be to monitor the freedom of players and officials to travel to and from the Israeli-occupied Palestinian territories.

"I'm very happy to start the process towards finding solutions," said PFA president Jibril Rajoub in a FIFA statement.

His Israeli counterpart, Ofer Eini, added: "Both Mr Rajoub and I want fair conditions for our footballers."

Sexwale, who declared this month that he was considering standing for the FIFA presidency, said he was "humbled" to chair the committee.

"This is not an easy task, but this meeting represents an important first step towards the consolidation of a regular exchange between the football associations of Israel and Palestine," Sexwale said.

"I'm feeling confident after seeing the team spirit today, as both associations have confirmed their intention to promote dialogue.

"As we have witnessed in my home country South Africa, I'm convinced that here, too, we'll bring people together through the power of sport."

(Writing by Brian Homewood in Berne; Editing by Neville Dalton) ((brian.homewood@thomsonreuters.com; +44 207 542 7933; Reuters Messaging: brian.homewood.reuters.com@reuters.net; . Twitter @brianhomewood))

Keywords: SOCCER FIFA/PALESTINE