In Cairo, Egyptian Foreign Minister Ahmed Abou Gheit, said the Bush proposal "contained positive elements that must be adhered to, built upon and developed."

Saudi Arabia's King Abdullah told Bush in a phone call that both "Palestinians and Arabs choose peace," according to a statement carried by the state Saudi Press Agency.

Abdullah spoke in favor of the Arab peace plan, which provides for the normalization of relations between Israel and Arab countries in exchange for Israel's withdrawal from Arab territories it occupied in the 1967 Mideast War. It also calls for establishment of an independent Palestinian state and a settlement for the Palestinian refugees issue.

The Saudi news agency did not say whether the kingdom - which unlike Egypt and Jordan does not have diplomatic relations with Israel - would attend the proposed conference.

Danny Ayalon, a recently retired Israeli ambassador to the United States, said the success of the conference would depend on its participants, including Saudi Arabia.

If, for example, the kingdom attended, he said, it would add immediate clout to the gathering and might encourage Bush to attend the conference himself.

Olmert's spokeswoman, Miri Eisin, also said she hoped the meeting could bring together "an umbrella of support for Palestinian moderates ... especially moderate Arab countries supporting the Palestinian moderates."

But she also cast doubt on whether the conference would produce tangible results, arguing it was too early to talk about full-fledged peace talks with Palestinian violence continuing.

Saeb Erekat, a top aide to Abbas, urged that the conference move beyond confidence-building. "The best thing to do is focus on substance at this meeting," he said.

Preparations among US Arab allies for the fall meeting were already under way.

Aboul Gheit, the Egyptian minister, said Secretary of State Condoleezza Rice would visit Egypt this month where she would meet with top Arab diplomats in the Red Sea resort of Sharm el-sheik to discuss Bush's proposal.

A meeting of the Quartet of Middle East peacemakers - the UN, US, European Union and Russia - was scheduled this week in Portugal. Aboul Gheit, who left for Portugal on Tuesday, and his Jordanian counterpart, Abdul-Ilah al-Khatib, are to visit Israel on July 25. Arab foreign ministers meet in Cairo five days later.

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