"Manoeuvring and watering down [the initiative] will be a strategic mistake," Moussa added. "It perhaps will lead to new bloodshed."
Last week, Israeli newspapers quoted Tzipi Livni, the foreign minister, as saying that Israel would not accept the Arab peace plan as it was.
| Foreign ministers also discussed |
the Iran nuclear issue [EPA]
She said that there should be no references to the right of the Palestinians displaced in the 1948 Middle East war to return to their homes inside Israel.
Moussa reiterated that Israel should give back all territories it seized in the 1967 war and allow Palestinian refugees to return.
Recognition and withdrawal
The 2002 plan calls for the establishment of a Palestinian state and full recognition of Israel in return for an Israeli withdrawal from all territory captured in the Arab-Israeli wars.
A later version of the initiative states that Israel should return all Arab land and also allow Palestinian refugees to return.
Also on Sunday, the Arab League called on the UN Security Council to set a timetable for the withdrawal of all foreign troops from Iraq.
Moussa listed what the Cairo-based organisation believed were the key issues for easing the crisis in Iraq.
As well as a timetable for the US-led forces to leave, the list also includes a call for the fair distribution of wealth and the disbanding of all militias.
Iran on the agenda
In a speech to the meeting of Arab foreign ministers, Moussa said: "I suggest that these foundations be included in a binding UN Security Council resolution that all Iraqi and other parties with present roles in Iraq should respect and follow."
But Arab governments have little influence in Baghdad.
"The land of Israel belongs to both Jews and Palestinians - as long as there are people who reject this fact, the conflict will never be solved"
Iskander, Boston, US
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The Arab League representative in Iraq resigned in January because of his frustration over the situation in the country, and what he said was apathy among Arab nations.
Another issue high on the Arab League's meeting agenda was Iran's nuclear programme.
Moussa called on Iran to co-operate with the IAEA and asked anew for a Middle East free of nuclear weapons, saying Israel should be "no exception".
Prior to the meeting, Abd El Rahman Shalgam, Libya's foreign minister, had announced that Libya would not attend the upcoming Arab summit in Saudi Arabia, adding that the Arab world "is not serious" and that "joint Arab action is dysfunctional".
On Sunday, he expressed his despair over the way Arab countries have failed to act together on issues, citing the EU as a successful model.
"There is no seriousness in the Arabic actions. For instance, they [Arab countries] consider Iran now as an enemy, not Israel, what is this nonsense?"