**Israeli PM Benjamin Netanyahu and Egyptian President Hosni Mubarak are due to meet in Cairo, to discuss the Israeli-Palestinian peace process.**The Palestinians refuse to restart negotiations unless Israel stops all building in West Bank settlements.
A former Israeli peace negotiator has said Israel and the US are close to agreeing principles for the talks.
The visit comes as Egypt is trying to negotiate the release of captive Israeli soldier Gilad Shalit.
A recent flurry of activity has prompted speculations that progress is being made on attempts to reach a prisoner swap deal.
Hamas, the Palestinian Islamic movement which controls Gaza, wants Israel to release hundreds of its prisoners in exchange for Sgt Shalit’s freedom.
‘Progress’
The group said a German mediator visited Gaza last week with Israel’s latest offer.
A Hamas delegation from Gaza was travelling to Damascus to meet the movement’s exiled leadership on Wednesday, Hamas officials told Reuters news agency.
Mr Netanyahu said on Monday that Israel wanted to “make progress and advance the negotiations in the near future”.
Israel says it is willing to enter negotiations without preconditions.
It has refused Palestinian demands for a complete halt to settlement building in the West Bank and East Jerusalem, which it occupied during the 1967 Israeli-Arab war.
But it has limited building work for 10 months in the West Bank, excluding East Jerusalem - where the Palestinians want their future capital.
Limits
Yossi Beilin, a former left-wing minister who played a key role in the 1993 Oslo peace process, said on Sunday that Mr Netanyahu is close to agreeing that peace talks should be based on the principle of the land occupied by Israeli in 1967.
The principles include “a real, albeit indirect commitment by Netanyahu to negotiate Palestinian demands to return to the 1967 borders,” Mr Beilin told AFP.
He also said Mr Netanyahu was willing to accept the demand that peace talks be limited to two years.
The prime minister’s office has said Mr Beilin was speaking for no-one but himself.
Egyptian Foreign Minister Ahmed Abul Gheit said Wednesday’s discussions were to focus on “ways to advance peace efforts”.
He has previously said that Egypt believes peace talks “must come either with a complete freeze of settlement activity” or “unequivocal guarantees that a Palestinian state will be established along the borders of 1967 including Jerusalem.”
About half a million Israelis live in the West Bank and East Jerusalem, which Israel has occupied since 1967 and the Palestinians claim for a future state.
The settlements are illegal under international law.