Addressing a meeting of Arab League foreign ministers who convened in Cairo to work out a common Arab position ahead of the November conference, Amr Moussa said the Bush proposal had been welcomed "in all seriousness" by Arab states.
However, he warned that the summit would prove to be a pointless exercise if it merely reflected an Israeli bias or tried to serve as "a political demonstration." Most Arab states would like to see a framework agreement put in place prior to its convocation.
Moussa said that Israel has continued to "lower expectations" for any high-level attempt to achieve a peaceful solution in the Middle East, accusing it of "divesting the conference of any meaning."
"To speak of peace while [Israeli] settlements continue to be built in Palestinian territories is a deception," he said.
He said that Arab states have been calling for an international peace conference for some time, but that they were not prepared to participate in "a PR campaign."
"Arab states want the conference to open the doors to a cessation of hostilities," he said.
Always a distant goal, prospects of a peace settlement between Israel and the Palestinians receded even further after violent street clashes in June between rival Palestinian factions in the Gaza Strip effectively divided the Palestinian National Authority (PNA) in two.
In the wake of the fighting, which left hundreds dead, the Islamist Hamas movement found itself running Gaza, while the more moderate and Western-supported Fatah party remained in charge of the West Bank.
In a statement released following the Cairo meeting, the Arab League said it was prepared to see the restoration of the status quo in Gaza, and said it would send a delegation to the strife-torn enclave in a bid to reconcile the warring factions.
It called PNA President Mahmoud Abbas the legitimate leader of the Palestinian people, and said Gaza and the West Bank were part of a single Palestinian entity.
On Wednesday, Israel threatened to cut off electricity, water and fuel supplies to the Gaza Strip in retaliation for the continued firing of Qassam rockets into Israel by Palestinian militants, although a high-level meeting of Israeli Cabinet ministers decided against any immediate military incursion.
During the meeting, Prime Minister Ehud Olmert directed military commanders to take forceful measures to minimize the barrages, but ruled out any immediate intervention by Israeli ground forces.
According to an unnamed official attending the security session, Defense Minister Ehud Barak recommended "pinpointed" attacks against militants rather than embarking on a large-scale invasion of Gaza.
"The prime minister has ordered the army to provide a plan on how to minimize rockets," the official said.
However, there was clear support from a number of senior officials present for a cutoff of basic supplies to Gaza, which is almost entirely dependent on Israel for water, power and fuel.
"I believe there is a range of steps Israel can take without creating a humanitarian crisis in Gaza, in order to send a message to Hamas and the rest of the terror groups," Foreign Minister Tzipi Livni said.
Earlier Tuesday, Vice Premier Haim Ramon said that Israel should attach a "price tag" to every rocket launched at Israel.
Over 1.5 million Palestinians live in the Gaza Strip, which was seized recently by the radical Hamas movement following street fighting with supporters of the more moderate Fatah movement that left hundreds dead.
On Monday, Islamic Jihad claimed responsibility for launching seven rockets into Israel, one of which struck near a day-care center in Sderot. No one was injured, but 12 children were treated for shock.
