CAIRO: Israeli Prime Minister Benjamin Netanyahu travels to Cairo on Tuesday for talks with Egyptian President Hosni Mubarak amid US efforts to revive stalled Middle East peace talks.

The discussions were to focus on "ways to advance peace efforts," Egyptian Foreign Minister Ahmed Abul Gheit said.

"We will listen to his points of view and we will inform him that a fair settlement must be reached on the Palestinian refugee problem and east Jerusalem," he said, referring to two key issues in the peace talks.

Abul Gheit said he would visit Washington in January for talks on the process as US President Barack Obama's administration was said to be drafting letters of guarantee for Israel and the Palestinians to serve as a basis for relaunching the talks which have been stalled for almost a year.

"US special envoy George Mitchell will present two draft letters of guarantee, one for Israel and one to the Palestinian Authority during his next visit to the region," one Arab diplomat in Cairo told AFP.

"The United States is hoping that the two letters will serve as a basis for the relaunch of Israeli-Palestinian negotiations but we don't know if they will satisfy the Palestinians, who want a complete freeze of settlement activity before talks resume," the diplomat said.

Washington was currently in talks with the Palestinians and Egypt -- a key US ally in the region -- over the letters, a Western diplomat said.

Former Israeli left-wing MP Yossi Beilin told AFP that Netanyahu was nearing an agreement with the US administration on the principles of the negotiations.

These principles include "a real, albeit indirect commitment by Netanyahu to negotiate Palestinian demands to return to the 1967 borders," including the thorny question of the future status of Jerusalem, according to Beilin.

Netanyahu was also ready to accept the US demand that the peace negotiations would be limited to 24 months, said Beilin, who was among the initiators of the 1993 Oslo accords.

Netanyahu's spokeman Mark Regev said in reaction that "Mr. Beilin only speaks for Mr. Beilin."

The hawkish Israeli premier said in a speech before Israeli diplomats on Monday that he wanted to resume negotiations in the near future.

"We want to make progress and advance the negotiations in the near future."

Egypt had already asked for written US guarantees before peace talks resume, in order to ensure their aim is the establishment of a Palestinian state within 1967 borders.

"The beginning of negotiations must come either with a complete freeze of settlement activity, which we continue to demand, or if we receive unequivocal guarantees that a Palestinian state will be established along the borders of 1967 including Jerusalem," Abul Gheit said in November.

Netanyahu announced last month a 10-month moratorium on new housing projects in Jewish settlements in the occupied West Bank in a move he said was aimed at helping to kick-start the peace talks suspended during the Gaza war at the turn of the year.

The moratorium does not include public buildings or construction under way and does not apply to occupied and annexed east Jerusalem, which Israelis consider part of their capital. The government has reportedly invited tenders for building hundreds of new homes in annexed east Jerusalem.

The Palestinians have rejected the moratorium, saying it fell far short of their demand for a complete halt of settlement activity in the whole West Bank, including annexed east Jerusalem, which they want as the capital of their promised state.