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 noncommital about how to proceed.

In weekend talks with Israeli Foreign Minister Tzipi Livni and other officials, Washington and Cairo proposed that Israel agree to take part "as soon as possible" in a meeting with a working group approved by the Arab summit that could begin negotiating a possible agreement.

"Arab League countries would talk formally and publicly as a collective with Israel," one diplomat said, calling the effort unprecedented in its potential scope. Talks in the past have generally been on a bilateral basis, the diplomat said.

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

At the summit, Arab leaders revived a 5-year-old peace plan that offers Israel normal ties with all Arab countries in return for 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 offered no details.

Senior American diplomats also spoke over the weekend with Livni's aides and urged Israel to take up the Arab offer to quickly start talking with the working group.

Initially, Israel may hold joint talk with at least Egypt and Jordan, and possibly other countries, but not Saudi Arabia, 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.

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