US Middle East envoy George Mitchell has urged a swift return to peace talks on his first day of meetings with Israeli and Palestinian leaders.

"We all share an obligation to create the conditions for the prompt resumption and early conclusion of negotiations," he said in Jerusalem.

US relations with Israel are said to be tense since President Barack Obama's speech to Muslims in Cairo last week.

Israeli PM Benjamin Netanyahu is under pressure to back a two-state solution.

Due to give a major address on Sunday, Mr Netanyahu spoke to Mr Obama by telephone on Monday, in a conversation described by his office as positive.

Mr Mitchell had talks with Israeli President Shimon Peres and Defence Minister Ehud Barak on Tuesday, and later met Foreign Minister Avigdor Lieberman.

He is also due to meet Mr Netanyahu himself.

Meetings are also planned with Palestinian Authority President Mahmoud Abbas and Prime Minister Salam Fayyad on Wednesday, the second and last day of his visit.

'Close allies and friends'

Meeting Mr Peres, the US envoy stressed the bond between America and Israel.

"Let me be clear," he said. "These are not disagreements among adversaries. The United States and Israel are and will remain close allies and friends."

But he also reaffirmed Washington's commitment to the establishment of a Palestinian state "side by side in peace and security with the Jewish state of Israel".

Mr Peres, whose post is largely ceremonial, said it was time "to take the bull by the horns" and pursue "a state for us and state for the Palestinians".

Few details of Mr Mitchell's talks with Mr Barak were given but the Israeli defence minister's office said they had discussed the question of settlement construction.

Speaking before his meeting with the US envoy, Foreign Minister Lieberman told a parliamentary committee he welcomed US efforts to promote peace.

"We definitely give our blessing to the American approach as a regional one, and to the attempt to reach an agreement not only with the Palestinians, but to reach a regional balance where everyone understands that there is a need to co-operate, [at least] with the constructive powers in the area," he said.

He also warned once again of the danger of Iran developing nuclear weapons: "If - God forbid - Iran obtains a nuclear military capability, the entire region, with all that this entails, will enter into a crazy nuclear arms race, with all the repercussions that need not be said."

Israeli concern

The US has increased pressure on Israel to end all settlement activity in the occupied West Bank but Mr Netanyahu wishes to continue building to accommodate "natural growth" in the existing settlements.

The settlements are illegal under international law, though Israel disputes this.

Mr Netanyahu has also stopped short of endorsing a solution to the conflict which envisages a sovereign Palestinian state, and has demanded that Palestinians recognise Israel as a Jewish state.

Mr Obama has renewed calls on the Palestinians to end all violence and incitement against Israelis.

His speech in Cairo on Thursday called for a "new beginning" in ties between the US and Muslims around the world.

Mr Obama said the US bond with Israel was unbreakable but described the Palestinians' plight as "intolerable" and called on Israelis to recognise "Palestine's right to exist".

Correspondents say many in Israel are concerned that the America's long-held strong backing for Israel may be weakening under Mr Obama.