Reporting from Cairo and Jerusalem — U.S. envoy George J. Mitchell met Thursday in Jerusalem with top Israeli officials to push for what at the moment appears unlikely: substantive talks between a divided Palestinian leadership and the new right-wing government of Israeli Prime Minister Benjamin Netanyahu.

Mitchell's diplomatic trip comes amid a troubling atmosphere highlighted by Israel's refusal to commit itself to a Palestinian state and growing animosity between Egypt and Hezbollah, the Shiite Muslim militant group in Lebanon that Cairo alleges has dispatched militants into Egypt to stage attacks near the Gaza Strip border and at tourist sites in the Sinai peninsula.

Mitchell told reporters after a meeting with Israeli Foreign Minister Avigdor Lieberman that "U.S. policy favors, with respect to the Israeli-Palestinian conflict, a two-state solution which will have a Palestinian state living in peace alongside the Jewish state of Israel."

Lieberman said the peace process had been a failure since the 1993 Oslo agreement and that a "new approach" was needed on the Palestinian question. He characterized the talk with Mitchell as "a great opportunity to exchange some ideas, and we spoke about really close cooperation."

Israeli Interior Minister Eli Yishai said: "The preferable course of diplomatic action at this time is two economies for two peoples and not two states for two peoples. The American emissary also knows that forcing the region into virtual diplomatic discourse will only breed the opposite results."

Lieberman personifies the Netanyahu government's hard line that makes the Obama administration and the Arab world uneasy. Israel supports peace talks with the Palestinians, but Lieberman has said his country is not bound by the U.S.-backed plan for Palestinian statehood that was reached in Annapolis, Md., in 2007. This stance and a comment Lieberman made last year suggesting that Egyptian President Hosni Mubarak, a key negotiator in the peace process, should "go to hell" have made the new foreign minister unwelcome in Cairo.

"We will work with any proposal by the Israeli government, but not through the Israeli foreign minister," Ahmed Aboul Gheit, Egypt's foreign minister, told Russian TV in a story picked up Wednesday by Israel's Channel 2.

Aboul Gheit said that Lieberman would not be allowed to travel to Egypt, adding, "A person should think about the consequences of the signals he sends from his brain to his tongue."

Egypt has been trying for months to negotiate for unity between hostile Palestinian factions -- the radical group Hamas, which controls Gaza, and the Fatah party of Palestinian Authority President Mahmoud Abbas, which runs the West Bank. In recent days, however, Cairo has been preoccupied with what it says is an attempt by Hezbollah, which is supported by Iran, to launch terrorist attacks at Egypt's tourist spots in the Sinai.

Egypt has arrested at least 25 suspected Hezbollah-backed militants. Hezbollah has said explosives and other materials seized by Egyptian authorities were destined for Gaza as part of Hamas' battle against Israel.

The tension between Cairo and Hezbollah indicates the wider politics at play over the Palestinian-Israeli conflict, including Egypt's role as a dominant regional voice at a time when Iran's influence is rising across the Middle East.

Mitchell is expected to meet with Abbas in the West Bank today before traveling to Egypt.

On another issue, Israeli President Shimon Peres told Mitchell on Thursday that the Jewish state was not considering an attack on Iran's nuclear facilities. "The solution to Iran is not military," said Peres, whose position in the Israeli government is largely ceremonial.

On Sunday, Peres said in an interview with Israel's Kol Hai Radio that Israel would attack if Iran did not halt its nuclear program, which Tehran says is designed to answer civilian energy needs but Israel and the West fear could lead to the production of weapons.