Israeli Prime Minister Benjamin Netanyahu said on Thursday the 2002 Arab peace initiative could help reach a regional peace agreement.

"We appreciate the efforts by Arab states to advance the peace initiative," Netanyahu was quoted by local daily Ha'aretz as saying at a reception marking an Egyptian national holiday at the residence of Egyptian ambassador to Israel Yasser Reda in Herzliya.

"If these proposals are not final, they can help create an atmosphere in which a comprehensive peace can be reached," said the Israeli prime minister, adding that "We hope in the months ahead to forge peace with the Palestinians and to expand that into a vision of a broader regional peace."

Meanwhile, Netanyahu praised the role Egypt plays between Israel and its neighbors.

"We appreciate (Egyptian President Hosni) Mubarak's efforts to ward off the radical forces and push towards peace. Egypt is the cornerstone for peace with our neighbors," local news service Ynet quoted Netanyahu as saying.

Addressing the relations between Israel and Egypt, which was the first Arab country to sign a peace treaty with Israel in 1979,Netanyahu said the two countries still have a long way to go before reaching a "very warm" peace.

The 2002 Arab peace initiative, backed by all 22 members of the Arab League, calls on Arab states to normalize relations with Israel in exchange for the Jewish state's withdrawal from lands occupied in 1967 and the creation of a Palestinian state.