'Proximity talks'

Netanyahu's visit came amid a flurry of diplomatic activity two days after the Arab League voiced its support for the so-called "proximity talks."

The Arab League agreed for the talks to go ahead after the Palestinians received US assurances that the construction would be shelved, an official of the pan-Arab organisation said.

The indirect talks the result of several months of US diplomacy, were set to start in March but scuttled after Israel announced it would build 1,600 new homes in east Jerusalem.

Mubarak, a strong backer of Mahmoud Abbas, the Palestinian president, has supported the Palestinian demand for a complete settlement freeze in occupied Palestinian territories and east Jerusalem before direct talks can resume.

Settlement halt

Israel has offered a limited halt to settlement construction in the West Bank that did not include building in east Jerusalem, occupied and annexed in 1967.

The Palestinians want the West Bank and Gaza for a future state, with east Jerusalem as its capital.

The Netanyahu-Mubarak meeting comes ahead of another visit by George Mitchell, the US envoy to the Middle East.

He is expected to meet Abbas on Friday and the Abbas-led Palestine Liberation Organisation is expected to endorse the indirect negotiations proposal the following day.

The latest diplomatic developments raise hopes of a resumption of Middle East peace talks that were suspended in December 2008 when Israel launched an offensive on the Gaza Strip.

According to the Israeli newspaper Haaretz, Netanyahu was to raise with Mubarak issues he considers crucial to Israel's security in the event of a peace deal, such as a demilitarised Palestinian state and control of borders and airspace.