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JERUSALEM — Israel and Egypt concluded their summit this week amid charges of failure and with a plea for more time to revive Israeli-Palestinian negotiations.

"I think you would agree that this a positive beginning," Israeli Prime Minister Benjamin Netanyahu said to Egyptian President Hosni Mubarak at a joint news conference after meeting for three hours Tuesday at the Egyptian Sinai resort of Sharm el-Sheik.

"But we need more work, and we are committed to work together with [Egypt] to achieve progress," Netanyahu added.

Mubarak agreed. "We need more deliberation," he cautioned.

Mubarak added that he hoped a three-way meeting with Palestinian Authority Chairman Yasser Arafat could be arranged soon, but that more time and further talks were still necessary to set the right conditions.

But Arafat on Wednesday said there was no prospect of a summit meeting with Netanyahu.

Arafat made the comment to reporters after being briefed by Mubarak's top political aide, Osama Al-Baz, on the previous day's summit.

Israeli officials were closely watching the outcome of the Arafat-Baz meeting for a sign of the Palestinian leader's response.

Senior Palestinian officials had earlier labeled the Netanyahu-Mubarak meeting a failure.

But Foreign Minister David Levy rejected that view. Speaking Wednesday in the Knesset, Levy said Netanyahu and Mubarak had established a basis for further dialogue between Israel and the Palestinians.

Political sources in Jerusalem were quoted Wednesday night as saying that Baz may conduct further contacts in Israel this week, a signal that some forward movement had been made in getting the talks back on track.

Few details were released on the discussions between Netanyahu and Mubarak.

The summit was the latest effort to revive stalled peace talks between Israel and the Palestinians.

The peace process and Israeli-Palestinian security cooperation were suspended in mid-March, after Israel began constructing Jewish housing at Har Homa in southeastern Jerusalem, and after a Palestinian suicide bomber killed three Israelis at a Tel Aviv cafe.

The Palestinians have demanded a halt to settlement activity as a condition for renewing talks. Israel has demanded the resumption of intelligence-sharing as a precondition.

Prior to the summit, Netanyahu said in a television interview that he believed Egypt held the key to reviving the talks because it could encourage the Palestinians and build up their self-confidence.

Israel has recently accused Egypt of encouraging the Palestinians to harden their stance, and of fueling international criticism of Israel.

But despite the high hopes, Israeli opposition members, along with Palestinian officials, labeled the summit a failure.

Palestinian Authority official Yasser Abed Rabbo said disparate forces were at work at the meeting: Mubarak's desire to revive the process, and Netanyahu's desire for a meeting with an Arab leader, to disprove reports of his diplomatic isolation.

Rabbo accused Israel of wasting the Egyptian initiative, as he charged Israel had done with recent European and U.S. peace efforts.

Meanwhile, the London Sunday Times reported that the Shin Bet, Israel's domestic intelligence service, warned Netanyahu that expansion of Israeli settlements would ignite a regional war.

Quoting the Shin Bet report, the Sunday Times said, "…more expansion of the settlements will bring about an escalation in violence in the West Bank to a level that we never witnessed in the past."

Labor Party leader Shimon Peres said the summit should not be viewed as an attempt to reach a breakthrough, but as an effort to prevent the breakdown of the entire peace process.

Peres added that Netanyahu was constrained by his rightist coalition partners from taking any significant steps to advance peace.

The left-wing Meretz Party introduced a no-confidence motion in the government because of Tuesday's inconclusive summit.

But diplomatic sources in Jerusalem called the meeting a first step toward resolving the Israeli-Palestinian crisis.

The sources said that if progress is made, U.S. Middle East envoy Dennis Ross would return to the region in another bid to get the peace talks moving forward.

In two trips to the region in April and May, Ross failed in his efforts to get the two sides back to the bargaining table.

At Tuesday's news conference, both Mubarak and Netanyahu stressed the important role of the United States as a mediator.

Although Netanyahu has rejected calls to freeze the building at Har Homa, he has indicated willingness to step up housing construction for Arabs in eastern Jerusalem.

But Arafat dismissed the gesture. In an interview this week with the Israeli daily Ha'aretz, Arafat said that building for Arabs in Jerusalem is no substitute for a halt to Israeli settlement activity.

Egyptian Foreign Minister Amre Moussa, in a separate interview with Ha'aretz, said that progress in the negotiations rested on Israeli concessions.

Moussa said that no amount of good will on Israel's part was enough to renew the negotiations, and that only a halt to settlement activity would get the talks going again.