Israeli Defense Minister Ehud Barak urged on Sunday Prime Minister Benjamin Netanyahu to put forward an Israeli peace initiative based on the Arab plan for resolving the Middle East conflict and establishing a Palestinian state, local daily The Jerusalem Post reported.

Barak made the call at a policy review meeting convened by Netanyahu. During the meeting, Barak suggested a formula according to which Israel's security requirements and its demand that it be recognized as a Jewish state could be met.

The defense minister said there was no way out of a comprehensive regional agreement which included a two-state solution and a solution to the refugee problem, which he said lay within a Palestinian state.

Turning to the relationship between Israel and the United States, Barak said that there was no reason for a collision with Washington.

"US-Israel ties are deep and close," said the defense minister. "We can and need to reach an understanding on all issues on the agenda."

Sunday's policy review meeting, held at the Prime Minister's office, was also attended by Israeli Foreign Minister Avigdor Lieberman and other top officials.

The meeting was held before Netanyahu's trip to Washington in May, which is expected to follow the finalization of the new Israeli government's foreign policy.

During the meeting, Netanyahu said that he was prepared to negotiate with any side that desires to push forward peace between Israel and the Palestinians.

"Contrary to reports, I don't condition dialogue with the Palestinians on recognition of Israel as a Jewish state.

Nevertheless, progress in the peace process does depend on the willingness to recognize Israel as a Jewish state," the prime minister was quoted as saying.

US President Barack Obama has said that he believes a two-state solution should be the basis for Israeli-Palestinian peace talks, and his Middle East envoy George Mitchell said in Jerusalem last week that a "two-state solution is the only solution" to the conflict.