The minister for infrastructure, Benjamin Ben-Eliezer, said on Thursday that his government had accepted some Egyptian ideas on the process and had "accepted the framework that has been crystallised by the Egyptians".
Ben-Eliezer was speaking after talks in Cairo with, Hosni Mubarak, the Egyptian president, but it was not clear if Mubarak had floated any proposals beyond those he made after Palestinian fighters captured an Israeli military officer near Gaza on June 25.
Corporate Gilad Shalit was seized on June 25 by Palestinian fighters who crossed over into Israel from Gaza to grab him.
According to that proposal, the Palestinian fighters would free the soldier in return for an Israeli commitment to release hundreds of Palestinian prisoners at a future date. Egypt blamed Hamas for preventing a deal on those terms.
Egypt in charge
Cairo has been mediating between the two sides on and off for more than three months, without any apparent progress.
Ben-Eliezer said the Egyptian government was working hard to bring about stability in the Middle East and "to change the situation in the south of Israel and mainly in Gaza".
Asked about a prisoner swap in exchange for the Israeli soldier, he said: "Because today the Egyptians are running the whole thing, I don't want to go into details.
"Egypt, as the leading power and the leading nation in the Arab world, knows exactly the sensitivity on both sides, and I believe that they could come, they have come with a framework that will be accepted," he said.
In a related development, Israel accused Iran on Thursday of bribing a Hamas leader to sabotage the release of Shalit.
Dan Gillerman, the Israeli ambassador to the UN, told the UN Security Council that "we heard news" earlier in the day that Tehran had paid $50m to Hamas leader Khaled Meshaal, who lives in the Syrian capital Damascus, "to sabotage the negotiations on the release of Corporal Gilad Shalit and prevent his release".
"We have every reason to believe that the Iranian regime has bribed Khaled Meshaal," he later said. "I cannot divulge the sources or give you any further details on this."
Iranian UN envoy Mansour Sadeghi, also appearing before the 15-nation Security Council, dismissed Gillerman's allegations as "baseless and absurd".
He said the charges were meant to "deflect attention from the root causes for all tensions in the Middle East - that is the Israeli regime's aggression, occupation and state terrorism".