But Egyptian President Hosni Mubarak, speaking at a joint news conference with Shimon Peres, said Israeli construction work on land captured in a 1967 war should stop and that Israel should take "courageous decisions" to push forward peace.
Egypt and other Arabs have blamed the United States for not doing enough to press Israel to stop settlement building work.
Prime Minister Benjamin Netanyahu has balked at Washington's call for a full settlement freeze, saying Israel must accommodate the "natural growth" of settler families.
"The minute we shall start to negotiate there won't be new settlements, there won't be confiscation of land," Peres said on a visit to Egypt, the first Arab state to sign a peace treaty with Israel and which plays a mediation role in the conflict.
Palestinian Prime Minister Salam Fayyad said on a tour of the West Bank on November 22 that Israeli leaders should stop "equivocating" on the issue. He reiterated Palestinian demands for a total settlement freeze before peace talks could resume.