On the sidelines of the meeting on Monday, Egypt dismissed reports that its calls for an emergency summit had sparked tensions with Algeria.
"There are no disagreements between Algeria and Egypt," Egyptian President Hosni Mubarak said, as he put his arm around the shoulders of Algerian President Abdelaziz Bouteflika.
"We're friends and we came here to have discussions and consultations with our brother (Libyan leader) Muammar al-Qadhafi," Mubarak added, as Bouteflika nodded in agreement.
In late July, Mubarak called for an Arab summit in the Egyptian Red Sea resort of Sharm al-Shaikh to deal with the Palestinian-Israeli crisis, Iraq and the "many challenges" facing the region.
The summit was scheduled for 3 August but was postponed after the death of Saudi King Fahd.
No summit date
Algeria - the current leader of the Arab summit that normally convenes in March every year - had reportedly expressed reservations about the summit Egypt called for, arguing that is the responsibility of the leading nation to call for a summit, not a member nation.
No new date has been set for the summit, Mubarak said.
The Arab summit normally
convenes in March every year
A Libyan official close to the talks said that Libya had tried to resolve differences between Egypt and Algeria and that "the atmosphere has been cleared".
The official, who did not want his name used because of the sensitivity of the information, said the summit wasn't expected to be held before presidential elections take place in Egypt on 7 September.
Egyptian presidential spokesman Sulaiman Awwad said the leaders discussed the situation in Iraq in view of the drafting of a new constitution, the Israeli withdrawal from Gaza and the Arab summit.
"The long time between the annual (Arab) summits makes it necessary for us to hold an emergency summit soon," Awwad said.