President Barack Obama's "reassertion" of U.S. leadership in the Middle East offers a rare opportunity to get peace between Israel and the Palestinians, Egyptian President Hosni Mubarak said.
He said if Israel took "serious steps" toward peace with the Palestinians, the Arab world would do the same.
In an editorial in The Wall Street Journal on Friday, Mubarak said Obama was willing to take a lead in achieving peace and the Arab world would reciprocate.
"A historic settlement is within reach, one that would give the Palestinians their state and freedom from occupation while granting Israel recognition and security to live in peace," wrote Mubarak.
Egypt has been trying to broker a power-sharing deal between the Fatah-led Palestinian Authority and Hamas and Mubarak said the Palestinians must overcome their divisions to achieve their aspirations for statehood.
"Egypt stands ready to seize that moment, and I am confident that the Arab world will do the same," he added.
A historic settlement is within reach, one that would give the Palestinians their state and freedom from occupation while granting Israel recognition and security to live in peace
Egyptian President Hosni Mubarak
The Bush administration waited until its final years in office to make a concerted effort on Israeli-Palestinian peace and was criticized by many Arabs for doing too little, too late.
Obama's Middle East envoy George Mitchell has traveled four times to the region this year in a bid to revive Israeli-Palestinian peace talks that were cut off following Israel's invasion of Hamas-run Gaza last December.
Earlier this week, Mitchell was optimistic preparations for full-blown talks would be done soon although one stumbling block has been a dispute over Israeli settlement expansion in the West Bank, occupied since the 1967 Arab-Israeli war.
"Israel's relentless settlement expansion, which has seriously eroded the prospects for a two-state solution, must cease, together with its closure of Gaza," said Mubarak, referring to a blockade by Israel of Gaza which is controlled by the Islamist Hamas Movement.
"The priority should be to resolve the permanent borders of a sovereign and territorially contiguous Palestinian state, based on the 1967 lines, as this would unlock most of the other permanent status issues, including settlements, security, water and Jerusalem," said Mubarak.
Mubarak praised Obama's speech in Cairo earlier this month, calling it a turning point in U.S. relations with the Muslim world, but also stressing it had to be followed up with "forward-looking" steps.
Obama was criticized by some human rights groups for choosing Cairo as the venue for his speech because of Egypt's own rights record.
Mubarak said Egypt had implemented reforms but conceded more must be done. "We openly acknowledge that this process still has a way to go in fulfilling our aspirations," he added.
Israel's relentless settlement expansion, which has seriously eroded the prospects for a two-state solution, must cease, together with its closure of Gaza
Israelis see Obama as 'pro-Palestinian'
A poll on Friday found that Israelis increasingly view Obama as pro-Palestinian as Washington has begun ramping up pressure on the Jewish state to halt settlement growth.
Only six percent of Israelis view the newly elected president as pro-Israel, while 50 percent believe he is pro-Palestinian and 36 percent see him as neutral, according to the poll published in the Jerusalem Post.
The same poll conducted in May before Obama and Israeli Prime Minister Benjamin Netanyahu's first meeting found that 31 percent of Israelis viewed Obama as pro-Israel and only 14 percent saw him as pro-Palestinian.
In the month between the two surveys Obama gave his major address in Cairo in which he called on Israel's right-wing government to halt all settlement growth in the occupied West Bank and accept the principle of a two-state solution.
The blunt language from Israel's most important ally has raised concerns among Israelis that Obama may distance himself from the Jewish state to improve relations with Arabs and Muslims.
Some 430,000 Israeli Jews live in more than 100 settlements scattered across the West Bank, including annexed Arab east Jerusalem. Their fate has been a core issue in previous rounds of negotiations.