A senior adviser to Barack Obama on Sunday denied reports that the U.S. president-elect plans to throw his weight behind the 2002 Arab peace plan, which calls for Israel to withdraw from all territories captured during the 1967 Six-Day War in exchange for normalized ties with the Arab world.

The British Sunday Times said Obama expressed this sentiment during his visit to Israel and the Palestinian territories last July.

Dennis Ross, Obama's adviser on Middle East policy, issued a statement Sunday, saying "I was in the meeting in Ramallah. Then-senator Obama did not say this, the story is false."

The Times cited a senior adviser who quoted Obama as telling Palestinian President Mahmoud Abbas: "The Israelis would be crazy not to accept this initiative. It would give them peace with the Muslim world from Indonesia to Morocco."

According to the Times, Obama, who is due to take office as the U.S. president on January 20, has been urged by leading bipartisan figures in the American foreign policy establishment to embrace the plan, which was first proposed by Saudi King Abdullah in an interview with New York Times columnist Thomas Friedman.

Among those who have reportedly lobbied the incoming president in favor of the plan are Lee Hamilton, the former co-chairman of the Iraq Study Group; Zbigniew Brzezinski, who served as national security adviser during the Carter administration; and Brent Scowcroft, who was national security adviser to President George H.W. Bush.

According to the Times report, the advisers say Obama should use the first six to 12 months of his presidency so as to utilize the good will afforded by the initial honeymoon period to push for a deal.

Given the geopolitical predicament of Arab states, who are fearful of the rise of Islamic radicalism as well as the specter of Iran's growing power, advisers believe the first year of an Obama presidency would be ripe for a breakthrough, according to the Times.

Though initially skeptical, Israeli leaders have been warming to the Arab initiative as a possible avenue to solve the impasse with the Palestinians. President Shimon Peres told world leaders on Wednesday at an interfaith dialogue in New York that the Arab peace initiative must be seriously considered as "a serious opening for real progress" in Middle East peace.

With elections looming, Kadima chairwoman Tzipi Livni and Labor chairman Ehud Barak are jockeying for the support of left-wing voters, with part of the focus being their disagreement over the Arab League's peace initiative.

The Arab peace initiative, first approved by the Arab League in 2002 in Beirut (and reaffirmed last year), calls for Israel's withdrawal from all the territories and a solution to the refugee problem in exchange for an Arab recognition of the end to the conflict and normalization between Israel and all the Arab countries.

Barak, the defense minister, has proposed that Israel use the peace initiative as a basis for negotiations, to smooth the way for both the Palestinians and the Syrians to make concessions. He also assumes that Israelis are willing to make concessions in exchange for a comprehensive peace.

Peres also supports this view, although his position as head of state precludes his taking an active role in the political discourse.