Israel's foreign minister Tzipi Livni is in Washington for talks with U.S. officials on the Arab peace initiative.
The Arab plan, also known as the Saudi initiative, calls for Israel to withdraw from all territories seized during the 1967 Six Day War in exchange for normal relations with all Arab countries. A Palestinian state would be established in the West Bank and Gaza Strip.
The talks in Washington, to be followed by an Arab League summit, are meant to reconcile differences between Israel and the Arab League, so the plan could become the basis for a revived peace process.
The Israeli newspaper Ha'aretz says that Saudi official Bandar Bin Sultan, a former ambassador to Washington, is also in the U.S. for talks.
Speaking to Israel Radio Monday, Livni said the Arab plan has positive elements but also sections that pose problems, especially a demand for a Palestinian right of return to homes owned in Israel before the 1967 war.
On Sunday, Israeli Prime Minister Ehud Olmert said Israel is taking the Saudi peace initiative seriously.
The Arab League approved the Saudi plan in 2002.
Peace talks between Israel and the Palestinians collapsed some six years ago, sparking a second Palestinian revolt or Intifada.
Israel says it refuses to conduct talks with a Palestinian government that does not recognize Israel, renounce violence, and honor prior agreements with the Jewish state.
The ruling Hamas group has refused those principles.
Some information for this report was provided by AFP and AP.