"We had a very important meeting... I believe our talks have increased our hopes for the future," Erdogan told reporters after a one-hour meeting with Ahmet Turk, the chairman of the Democratic Society Party (DTP).

"We have both gained from our talks and I believe the meeting will constitute a positive step towards trust," he added.

For two years, Erdogan snubbed a request by the DTP leader for a meeting on ways to end the rebel violence, citing the party's refusal to label the outlawed Kurdistan Worker's Party (PKK) a terrorist organization, as it is listed by Ankara and much of the international community.

In a change of heart, Erdogan said Tuesday that he could not "put the DTP in the same basket" as the PKK.

Turk, whose party risks a ban for links with the rebels, also emerged upbeat from the talks, saying: "We are pleased and hopeful that an atmosphere of dialogue has been secured."

The talks came a week after Erdogan's government announced that it was working on a reform package to boost the rights of its Kurdish community and encourage PKK rebels to lay down arms.

The government said it would seek widespread social consensus on the plan through meetings with political parties, civic organizations, academics and intellectuals.

Ankara's push coincides with a peace plan that jailed PKK leader Abdullah Ocalan is expected to announce on August 15.

Last month, the PKK said that it had extended a unilateral truce by six weeks until September 1 in anticipation of its leader's proposals and to help settle the conflict.

Ankara rejects dialogue with the rebels and has never formally recognised any of the rebel truces.

The PKK has been fighting for self-rule in Turkey's mainly Kurdish southeast and east since 1984, in a conflict that has claimed some 45,000 lives.