(Adds Abbas, Israeli intelligence official)

By Adam Entous

JERUSALEM, April 1 (Reuters) - The United States and Egypt are urging Israel to agree to quickly start talks with a committee of Arab states on how to move the peace process forward, diplomats involved in the matter said on Sunday.

While generally welcoming the peace initiative endorsed by Arab leaders at a summit last week in Saudi Arabia, Israel has called several key components problematic and has been noncommittal about how to proceed.

In weekend talks with Israeli Foreign Minister Tzipi Livni and other officials, Washington and Cairo proposed that Israel agree to meet "as soon as possible" with a working group approved at the Arab summit to begin negotiating the details of a possible agreement.

Several Arab League countries would talk "formally and publicly as a collective" with Israel, a senior diplomat said of the proposal, calling it unprecedented in its potential scope.

Talks in the past have generally been on a bilateral basis.

"The ball has passed from the Arab side to Israel's side and there is a need now to respond," Israel's military intelligence chief, Major-General Amos Yadlin, was quoted by a senior government official as telling the Israeli cabinet on Sunday.

U.S. and Egyptian diplomats were not immediately available to comment.

At last week's summit, Arab leaders revived a 5-year-old plan that offers Israel normal ties with all Arab countries in return for a full withdrawal from land seized in the 1967 Middle East war, creation of a Palestinian state and a "just solution" for Palestinians displaced in 1948 with Israel's creation.

Arab leaders agreed to set up a committee to follow up on the peace proposal in talks with the United Nations, the Quartet of Middle East mediators and other "international parties".

In interviews with Israeli newspapers published on Friday, Israeli Prime Minister Ehud Olmert said the Arab plan could help create positive momentum in future negotiations.

But Israel opposes giving Palestinian refugees the right of return to their former homes in what is now the Jewish state, and it wants to hold onto some of the major settlement blocs in the occupied West Bank.

"We would like to promote any dialogue with them (moderate Arab states) in order to seek peace and normalisation between Israel and these states," Livni said on Sunday.

She said she spoke over the weekend with Egyptian Foreign Minister Ahmed Aboul Gheit but did not offer any details.

Separately, senior American officials pressed Livni's aides to respond positively to the Arab offer by agreeing to quickly engage with the working group, diplomats said.

"We are awaiting a response from the Israeli government and we hope their response will be positive so that we can move ahead," Palestinian President Mahmoud Abbas said at a press conference in the West Bank city of Ramallah with German Chancellor Angela Merkel.

If Israel agrees, joint talk could initially be held with Egyptian and Jordanian leaders, and possibly other Arab League members, the diplomats said.

The United Nations has raised the idea of holding an expanded meeting of the Quartet of Middle East mediators that would include Israeli and Saudi leaders, but the Saudis balked at a public meeting, the diplomats said. (Additional reporting by Jonathan Saul in Jerusalem and Nidal al-Mughrabi in Gaza)

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