Before Ahmad Quraya's arrival in Cairo, participants in the talks said they had met with Egyptian intelligence chief Umar Sulaiman, who brokered a Palestinian truce in June.
Most Palestinian resistance groups were represented in the discussions, including Palestinian leader Yasir Arafat's Fatah, Hamas and Islamic Jihad.
Quraya said he was hopeful the "dialogue will succeed" as he announced on Thursday that he was leaving immediately for Egypt from his offices in the West Bank.
But a senior Israeli intelligence source expressed doubt the talks would result in a truce.
"These groups don't want a ceasefire," he told reporters in Tel Aviv.
But the Israeli government, which never recognised the truce brokered by former Palestinian premier Mahmud Abbas, said it could curb operations in the occupied territories to give Quraya a chance.
"I imagine we will be able to reduce the intensity of our military activity if the Palestinians manage to reach a truce, provided there are no attacks being prepared which we would have to foil"
Israeli deputy defence minister
"I imagine we will be able to reduce the intensity of our military activity if the Palestinians manage to reach a truce, provided there are no attacks being prepared which we would have to foil," Deputy Defence Minister Zeev Boim said.
"We have to give Abu Alaa [Quraya] a chance," Boim added.
But the talks started against the tense backdrop of what Israel said was a foiled "suicide attack" by Islamic Jihad on a school in northern Israel.
Israeli military sources announced on Wednesday that troops in the West Bank had captured two Jihad fighters, including one who was strapped with an explosives belt.
"Had the attack we foiled yesterday taken place, it is obvious that Arafat would no longer be in the region, in the Middle East," Israel's hawkish Interior Security Minister Tzachi Hanegbi said.
And on Thursday night, an Israeli army spokesman said troops discovered a belt containing several kg of explosives near Ram Allah, which they detonated.
However, Arafat said the Palestinian side was ready to implement a truce.
"We are ready, but we hope that the other side will be ready also," he said.
Palestinian groups are likely to set a number of conditions for a truce, such as the release of more prisoners, a halt to the construction of the West Bank Apartheid Wall, an end to settlement activity, and some army withdrawals.
Boim admitted the pace of the West Bank settlement evacuations required by the internationally drafted "roadmap" peace plan had slowed in recent months.
"This slowing down was explained by the fact that the Palestinian Authority has not acted on its commitment to fight against terrorism, which made the evacuations more difficult," he said.
As both sides continued to blame each other for the stalled peace process, US Secretary of State Colin Powell was preparing to receive the promoters of an unofficial peace plan, the so-called Geneva Initiative.
"I think it's productive, so long as they adhere to the principles of the blueprint... That is, we must fight off terror, that there must be security, and there must be the emergence of a Palestinian state that is democratic and free"
US President George Bush on the Geneva Initaitive
"I will be meeting with them tomorrow," Powell said in Brussels, referring to the plan by former Israeli justice minister Yossi Beilin and former Palestinian information minister Yasir Abd Rabbu.
"I think it's a... quite appropriate thing for me to do as secretary of state," added Powell, after Israel said such a meeting would be a mistake.
US President George Bush, speaking during a meeting in Washington with visiting Jordanian King Abd Allah II, said the Geneva plan can only be productive if it stands by the principles of the roadmap.
"I think it's productive, so long as they adhere to the principles of the blueprint," Bush said. "That is, we must fight off terror, that there must be security, and there must be the emergence of a Palestinian state that is democratic and free."
King Abd Allah added: "We haven't given up on the peace process. But it's going to be a tough road ahead for all of us."
The roadmap calls for the creation of a Palestinian state living at peace with Israel by 2005.
The Geneva Initiative contains proposals for resolving some of the thorniest problems in the conflict that are not in the roadmap, such as the status of Jerusalem and the return of Palestinian refugees.