Prodded by President Clinton and other world leaders, Cyprus's Greek and Turkish leaders agreed today to resume U.N.-sponsored talks designed to resolve the bitter differences that have divided the island and exacerbated tensions between Greece and Turkey.

Clinton announced the talks aboard Air Force One, en route to Turkey to begin a 10-day southeast Europe trip that will include a stop in Athens.

"There's enormous potential good that could come out of this for the people of Greece, the people of Turkey, the people of Cyprus and the friends of all of them," the president told reporters crammed into his airborne office. "I'm very excited about it and very hopeful."

He said the so-called proximity talks "will go forward without pre-conditions." The goal "is to prepare the ground for meaningful discussions . . . leading to a comprehensive settlement."

The talks, to be conducted with U.N. officials beginning Dec. 3 in New York, mark the first significant step in Cypriot peace efforts since 1997, when U.N.-sponsored negotiations broke down. Clinton has been trying to restart the process, prodding Turkish Prime Minister Bulent Ecevit at a recent White House meeting and assigning special envoy Al Moses to a month of shuttle diplomacy among Cypriot, Greek and Turkish officials.

Clinton said he hopes the parties now have a greater incentive to pursue a peace accord, in part because it could boost Cyprus's and Turkey's chances of joining the European Union.

Cyprus, a Mediterranean island of 837,000 people, won independence from Britain in 1960. Ethnic Turks then battled the more numerous ethnic Greeks for dominance, and U.N. troops arrived in 1964 to try to impose peace. In 1974, Greece's military junta supported a coup by Greek Cypriots who wanted to unite Cyprus with Greece. Turkey responded by sending troops to protect Turkish Cypriot interests, resulting in the partition that exists today.

Greek Cypriots control the southern two-thirds of the island, which is the nation of Cyprus recognized by most of the world. Turkish Cypriots control the northern third, which only Turkey recognizes as a nation.

The partition is costly. Trade has been stifled between the two sectors, and many Turkish and Greek troops guard the regions, with U.N. peacekeepers acting as a buffer. Clinton declined to offer details of a possible peace settlement, but a senior official traveling with him said the United States hopes for a "bizonal, bicommunal federation on Cyprus."

Under such an arrangement, Turkish Cypriots would continue to have their own community, but the island would be recognized as one nation, and the two sectors would interact culturally and economically. All Cypriots, notably the ethnic Turkish minority, would have to be assured of their safety, and the parties would have to resolve disputes over land and water, the official said.

Turkish Cypriots might be willing to negotiate, the official said, because they "are isolated from the rest of the world. They have a standard of living that is significantly less than that of people in the southern part of Cyprus."

Cypriot President Glafcos Clerides and Turkish Cypriot leader Rauf Denktash met four times in 1997. But the talks broke off, and Clinton and some European and U.N. leaders have been pressing the two men to start anew.

Denktash told Cypriot television today he had accepted an invitation by U.N. Secretary General Kofi Annan to hold "indirect talks" with Clerides. The two were not expected to meet face to face, according to Denktash, who added that he would insist on a confederation of two separate states for the island.