Zapatero announced the plan at a summit with President Jacques Chirac of France.
Italy is also on board, Zapatero said, and Spain hopes to win the endorsement of Britain and Germany and the broader European Union in the run-up to a December summit in Brussels.
"We cannot remain impassive in the face of the horror"
Jose Luis Rodriguez Zapatero, Spanish prime minister
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"We cannot remain impassive in the face of the horror that continues to unfold before our eyes" Zapatero told a news conference in this coastal city near the border with France.
Zapatero cited the Israeli shell blast that killed 19 people last week in a Palestinian village and the death this week of an Israeli woman in a Palestinian rocket attack.
Zapatero said: "The violence has reached a level of deterioration that requires determined, urgent action by the international community."
The plan has five components: US position 'unchanged'
An immediate ceasefire.
Formation of a national unity government by the Palestinians.
An exchange of prisoners - including the Israeli soldiers seized recently.
Talks between Israel's prime minister and the Palestinian president.
An international mission in Gaza to monitor a ceasefire.
The US government's position "remains unchanged," Gonzalo Gallegosa, the State Department spokesman, said.
"The US looks forward to working with a Palestinian government that governs responsibly, and is interested in making progress toward peace. This means a Palestinian government that accepts the Quartet principles."
Saeb Erekat, the Palestinian negotiator, who is close to Mahmoud Abbas, the Palestinian president, said any international peace initiative was welcome but he stopped short of a warm endorsement of this new one.
"We don't need to reinvent the wheel, we don't need a new initiative. What we need is a mechanism for implementation and timelines.
President Bush has specified the endgame as a two-state solution. What we need is a realistic political track, and that's where this initiative can come in."
The British Foreign Office said it was reserving comment until the full details of the plan are released in December.
Asked if the initiative did not first need the support of Israel and the US, Zapatero said it made sense for the three largest contributors to the expanded UN force in Lebanon to assert themselves for peace.
A senior official in the Israeli foreign ministry has altogether rejected the European initiative, saying it was “non-existent” and has been hastily announced.
The Palestinian Authority, on the other hand, has welcomed the initiative. Nabil Abu Ridaina, the spokesman for the Palestinian presidency, said the Palestinian authority had welcomed the idea of holding an international peace conference, which is stipulated by the roadmap peace plan.