The United Nations floated the idea on Monday of a meeting bringing together Israel, the Palestinians and Arab states as US Secretary of State Condoleezza Rice visited the region to try to revive peace talks.
Israeli Prime Minister Ehud Olmert said he would "not hesitate to participate" if invited to an expanded meeting of the Quartet of Middle East mediators.
But US officials played down the idea, saying it was one of several possibilities under consideration and that no decisions had been made.
Rice met separately on Sunday with Palestinian President Mahmoud Abbas and Olmert to gauge the chances for peace talks in which both sides would initially talk to the United States rather than directly to each other.
However, she said she was not striving for a "big bang" breakthrough.
In Amman, Rice met for a second time in 24 hours with Abbas. She was scheduled to meet later with Jordan's King Abdullah before returning to Jerusalem for further talks with Olmert.
Rice has been touring the Middle East trying to persuade Arab governments to breathe new life into a peace plan they ratified in 2002 by adding what she calls "active diplomacy" -- seen as code for early contacts with Israelis.
UN Secretary-General Ban Ki-moon, also on a visit to the region, said on Monday that Israeli and Palestinian leaders, along with officials from Saudi Arabia, Egypt, Jordan and the United Arab Emirates, could be invited to attend the next Quartet meeting, expected to take place in the region.
"It is a very interesting, useful idea to consider. But we need more consultations," Ban said.
The United Nations is part of the Quartet, whose other members include the United States, the European Union and Russia.
A public meeting that brings Israeli and Saudi leaders together would be a breakthrough.
The countries do not have formal relations, though there have been reports of informal Saudi contacts with Olmert.
Rice believes steps toward a broader Arab-Israeli reconciliation would make it easier to make progress on the long-stalled Israeli-Palestinian front.
On her fourth visit to the Middle East in four months, Rice is talking to the Israelis and Palestinians separately because Olmert has so far ruled out engaging Abbas on peace since the Fatah leader formed a Palestinian unity government with the Islamist Hamas faction.
At a press conference in Jerusalem with Ban, Olmert said that a long-stalled "road map" peace plan "will be the basis for advancement here between us and the Palestinians."
Neither the Israelis nor the Palestinians have fulfilled their commitments under the peace plan, which calls for Israel to halt settlement building in the occupied West Bank and the Palestinians to dismantle militant groups.
The 2002 plan touted by Rice, known as the Saudi initiative, offers Israel normal ties with Arab countries in return for full withdrawal from land it occupied in the 1967 Middle East war.
Olmert has urged Arab states to advance the proposal but Israel has said it cannot accept ome of the terms.
Israel and the Quartet of Middle East negotiators have demanded the Palestinian government recognize Israel, renounce violence and accept existing peace deals.
The new unity administration has agreed only to "respect" previous accords and has stopped short of recognizing Israel or giving up the right to armed struggle.
Analysts doubt Rice can make much progress given Olmert's political weakness -- one opinion poll this month showed he would win as little as 3 per cent of the vote if an election were held immediately -- and the divisions among the Palestinians.