The Arab League statement calling for land swaps between Israel and Palestinians sparked debate in the Knesset, Maariv and Israel Radio reported Wednesday.
The Israeli-Palestinian conflict isn't over land but Israel's right to exist, Israel Radio said Israeli Prime Minister Binyamin Netanyahu stated at a meeting with Foreign Ministry officials Wednesday.
Proof of this, Netanyahu said, is the disengagement from the Gaza Strip when Israel evacuated settlements and left the area.
Opposition leader Shelly Yachimovich called on Netanyahu to pursue the initiative, telling Israel Radio even if it fails, Israel will gain points in the international community for aspiring peace.
In an interview on Israel Radio, Home Front Defense Minister Gilad Erdan said, while the development appears to be a positive one, Israel won't accept the 1967 borders as a starting point for talks.
An unnamed senior Israeli government official told Maariv that Israel welcomes the encouragement shown by the Arab League and U.S. Secretary of State John Kerry to the diplomatic process. The official noted that Israel continues to oppose preconditions dictating the resumption of talks.
During a visit to Italy, Israeli President Shimon Peres called the initiative a positive step.
"The Arab League foreign minister's visit in Washington is a positive step and gives a tailwind to advancing the peace process and to reach a solution based on two states for two peoples," Peres said in a Maariv report.
"The differences between us and the Palestinians are not large. Abu Mazen [President Mahmoud Abbas] is a worthy and serious peace partner and Israel is willing to return to the negotiating table without preconditions."
Israeli Justice Minister Tzipi Livni, charged with negotiating with the Palestinians, praised the initiative.
"Even during a period of ups and downs in the Arab world, they must achieve normalization with Israel when we achieve peace with the Palestinians," The Times of Israel quoted her saying.
Speaking on behalf of the Arab League in Washington on Monday, Qatari Prime Minister Sheik Hamad Bin Jassem al-Thani stressed the need to base any agreement between Israel and the Palestinians on the '67 border and conduct mutually agreed upon land swaps.