Rejecting the claim Doha was racing to normalise contacts with Tel Aviv, Shaikh Hamad bin Jasim bin Jabir Al Thani, who is also first deputy prime minister, added that Arab states should tell Israel that problems could be solved only with the restoration of Palestinian rights.
The minister said Arab governments needed to "talk face to face for the next steps concerning the peace-making operation and ending the Israeli occupation for West Bank areas".
He said that with Israeli membership of the UN, Arab governments had in effect already recognised the country.
Responsibilities and interests
Last month, Shaikh Hamad told a US think-tank, the Council on Foreign Relations, that some countries had gone too far in saying they would never make peace with Israel.
"The Arabs - some of them - they went too far with their people that they would not talk with the enemy under any circumstances," he said.
Shaikh Hamad says Qatar deals
in a direct way with Israel
"And I think this is, again, wrong policy. There is no enemies and no friends, but there is always not only responsibilities, but interests."
He added that Qatar's example is to deal in a direct and transparent way, rather than hold secretive talks and relations as has been the case with some countries.
Al Thani's comments came days after Pakistani President Pervez Musharraf indicated that Israel and Pakistan should further discuss forging diplomatic relations.
However, while Shaikh Hamad advocated a rapprochement with Israel, he also told Aljazeera that Iraq's neighbouring countries should be wary of involving themselves in Baghdad's affairs.
"Naturally we are worried because we know from the experiences of countries such as Lebanon and others that sectarianism has never succeeded.
"Iraq is a great country, a rich country ... the only losers in a continuing sectarian conflict will be its own people ... both Shia and Sunni are Muslims, what should matter is keeping Iraq's unity."
Israel FM Silvan Shalom met
Shaikh Hamad in September
And while the foreign minister said Qatar would be ready to send an ambassador to Iraq when the security situation improved, he said Doha's view was that "we want Iraq to pull itself out of this crisis, but regrettably the days ahead are going to be very difficult".
Syria and Iran
Shaikh Hamad added that "the last thing this region needs is another crisis ... if Syria has done anything wrong and if the US has evidence, then any dispute needs to resolved by negotiation ... not by military means".
Syria has been accused by US officials of allowing militants to cross into Iraq.
"The region is already so troubled that it cannot take any additional pressures," Shaikh Hamad said.
He added that it was for this reason that Qatar was anxious to see the region free of nuclear weapons.
Asked about Iran's nuclear ambitions, he said: "When Israel's foreign minister recently spoke of his fears over Iran's nuclear programme, I reminded him in public that his country also has nuclear weapons and that his own country also needed to be inspected and end production.
"The Iranian nuclear issue needs to be dealt with by an even hand ... and addressed by peaceful means. We don't need any more escalation of tensions."