Israel's top peace negotiator Tzipi Livni said Thursday that the Arab League's modification of its plan to end the Israeli-Palestinian conflict could bring new talks closer.

But a Palestinian envoy said Israel had responded to the new overtures with "colonization and confrontation."

Livni, who is also Israel's justice minister, said after talks with UN leader Ban Ki-moon that a freeze on peace negotiations since September 2010 could thaw with the latest Arab League initiative, which was announced after a meeting between Arab ministers and US Secretary of State John Kerry.

"I hope so, it is (in) the interests of Israel, the interests of the Palestinians and the interests of the international community," Livni told reporters.

"It is clear that Secretary Kerry is completely involved, determined, and I believe that basically it (new talks) is something that we need to do."

An Arab League offer of full diplomatic ties in exchange for Israel's withdrawal from land occupied in 1967 now includes a reference to the principle of mutually-agreed land swaps.

The move has been hailed by Washington as "a very big step forward."

Livni, who held talks earlier in Washington with Kerry, said the move was "important for different reasons."

"One is the idea that even though we have a situation which is very difficult in the region and we have the states that are collapsing, and the region with all these problems, but yet we have the Arab League supporting these talks between Israel and the Palestinians and this is good news.

"The other good news is that basically what they said is that the Arab peace initiative is not something which is take it or leave it but it is negotiable," Livni added.

It is "a good message to Israel to understand that when we achieve peace with the Palestinians, hopefully we can have peace with the entire Arab world."

"So we live in a tough neighborhood, it is going to be difficult and complicated, but the message coming from Washington after the meeting between the Arab League and Secretary Kerry was quite a positive one," Livni said.

But the Palestinian envoy to the United Nations, Riyad Mansour, said that Israel was only "paying lip service" to peace talks.

"While serious regional and international efforts are under way to revive the path of peace and to salvage the two-state solution, Israel instead continues to choose colonization and confrontation," Mansour said.

Mansour slammed Israeli tactics in a letter to Ban and the UN Security Council which highlighted how "hundreds of Palestinians have been forcibly displaced" in the past week and others face eviction.

He said such actions are "fuelling tensions on the ground, inciting violence and provoking deeper mistrust," as he called on the Security Council to act.

The Palestinians halted peace talks with Israel in September 2010 when Israel refused to renew a moratorium on building settlements in the occupied territories.