In a dramatic response to an Arab peace initiative, Israeli Prime Minister Ehud Olmert has invited Arab leaders to a regional peace conference to discuss their ideas for resolving the Arab-Israeli conflict.

Olmert also tried to soothe tensions with Syria, saying he Israel has no plans to attack its northern neighbor and would like to reach a peace deal.

Olmert's surprise call for a regional conference came Sunday during visits by German Chancellor Angela Merkel — who currently holds the European Union's rotating presidency — and the leader of the U.S. House of Representatives, Nancy Pelosi.

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Speaking at a joint news conference with Merkel, Olmert said, "I would take advantage of this important opportunity of being here in Jerusalem with the president of the European Union to invite to a meeting all Arab heads of state, including, of course, the king of Saudi Arabia, whom I regard as an important leader, in order to engage in dialogue." He said each side would bring its own demands, and neither would try to dictate terms.

Almost every Israeli prime minister has called for peace talks with moderate Arab leaders over the years, but the only multinational forum was the 1991 Madrid conference, which was followed by secret Israeli-Palestinian contacts and a series of interim peace accords.

Olmert's invitation Sunday was the first time Israel has called on Saudi Arabia — which has no formal relations with Israel but has also pushed recently for a peace deal — to take the lead.

At a summit in Riyadh last week, the Arab League relaunched a 2002 Saudi peace plan that would recognize Israel in exchange for withdrawal from all captured territories and a just solution for the hundreds of thousands of Palestinian refugees. Olmert welcomed the decision but said Israel did not accept all parts of the plan, especially a return of refugees to properties inside what is now Israel.

"I think this new way of thinking, the willingness to recognize Israel as an established fact and to debate the conditions of the future solution, is a step that I can't help but appreciate," he said Sunday.

While he proposed a regional meeting, he also said he would attend a meeting under Saudi auspices.

He said that if King Abdullah of Saudi Arabia were to invite him, moderate Arab leaders and Palestinian President Mahmoud Abbas to a meeting "to present Saudi Arabia's ideas before us, we will come to hear them and be glad to offer our ideas."

There was no immediate response from Saudi Arabia.

Saeb Erekat, the chief Palestinian negotiator, said Olmert should agree to the Arab peace initiative.

"I think if he accepts the Arab peace initiative, it would open the way to many conferences, not one," he said.

In a series of interviews over the weekend, Olmert said he would welcome talks with Saudi Arabia and moderate Arab leaders, but he stopped short of calling for a regional peace conference.

Merkel cautiously embraced the idea.

"It is important to talk, but is also is important to turn the spoken word into deeds," she said.

Pelosi met with Olmert, who asked her to take a message to Syrian President Bashar Assad when she visits this week — that if Syria stops its support for terrorism, Israel would be interested in making peace, Olmert's spokeswoman said.

"Pelosi is conveying that Israel is willing to talk if they (Syria) would openly take steps to stop supporting terrorism," Olmert spokeswoman Miri Eisin said. "But at this point the Syrian government, by openly backing terror all around the Middle East, is not a partner for negotiations."

At Sunday's news conference with Merkel, Olmert said Israel has no intention of launching an offensive against Syria, an apparent response to Israeli military intelligence reports that Syria believes it is at risk of attack.

Israeli daily Haaretz said Pelosi would deliver the Israeli reassurance during her trip to Damascus.

Olmert also denied rumors that the U.S. plans a strike on Iran this summer, with Israel carrying out diversionary campaigns into Lebanon and Syria.

"Statements that there is an American plan to strike in Iran coordinated with Israel, and that allegedly Israel will sometime in summer, simultaneously attack Syria and Hezbollah in Lebanon, is a plan we are not familiar with," Olmert said. "It is a false rumor, without any basis."

Israel and Syria are sworn enemies, though peace talks came close to success in 2000 before breaking down. Israel charges that Syria-backed Palestinian militants are directing violence against Israel from the West Bank and Gaza, but maintains it has no hostile intentions toward Syria.

"Israel is not planning any attack, does not want to attack," Olmert said. "I hope that no one jumps to the wrong conclusion, makes a miscalculation, because of claims which have no basis in reality."

U.S. presidential counselor Dan Bartlett said Sunday that the White House had asked Pelosi not to go to Syria.

"We did not believe it would advance the diplomatic efforts in the Middle East. I think most Americans would not think that the leader of the Democratic Party in the Congress should be meeting with the heads of a state sponsor of terror," he said on CBS' "Face the Nation."

Three Republican congressmen — Frank Wolf, Joe Pitts and Robert Aderholt — were in Syria Sunday, where they met with Assad. They said they believed there was an opportunity for dialogue with the Syrian leadership.

Complete coverage is available in FOXNews.com's Mideast Center.