 Mr Gates is in the region, along with several other senior US officials |
US defence secretary Robert Gates has urged Iran to respond to US diplomatic overtures by September.
His Israeli counterpart Ehud Barak indicated that military action remained an option on Iran, following talks between the two in Jerusalem.
Senior US officials are engaged in a drive to breathe new life into faltering regional peace moves.
US envoy George Mitchell met Egypt's Hosni Mubarak for talks and will meet the Palestinian president later.
He has already been in Syria, drumming up regional support for the new US initiative.
Both Mr Mitchell and Mr Gates - as well as two other senior US envoys - are meeting Israeli leaders as part of the bid to get the Israeli-Palestinian peace process, which has been stalled for six months, back on track.
US-Israeli relations have become strained since US President Barack Obama demanded a halt to all Israeli settlement building in the occupied West Bank.
Iran warned
Shortly after coming to office in January, Mr Obama made an overture to Iran, saying that if it and countries like it were "willing to unclench their fists, they will find an extended hand from us".
But Israel says Iran's alleged nuclear ambitions remain its number-one concern and in recent weeks the US has expressed dismay about Iran's suppression of protests over disputed presidential elections.
On Monday, Mr Gates said the US offer to Iran was "not open-ended", and added that President Obama was hoping for a response, "perhaps by the time of the UN General Assembly" in September.
Mr Barak cautioned that "no option" had been removed in its handling of Iran - suggesting military force remained a possibility - though "priority should be given still to diplomacy and sanctions".
The two men struck a conciliatory tone, with Mr Gates speaking of a "good meeting" with Mr Barak, and reaffirming the "strong commitment" of the US to Israel's security.
Mr Barak said he was "extremely thankful for US support [on defence] - financial and technological".
Despite the apparent harmony, the two sides do not see exactly eye to eye on Iran, the BBC's Katya Adler in Jerusalem reported prior to the talks.
Robert Gates: "I reaffirmed the strong commitment of the US to the security of Israel""
Israel's government argues that until the perceived Iranian threat has been diminished there can be no Middle East peace. The Obama administration sympathises, but disagrees, our correspondent says.
On forging an Israeli-Palestinian peace deal, Mr Gates said it would "not be quick or easy" but was the only way to provide both sides with "the safety and security they deserve" and was in the interests of all countries in the region.
Palestinian obstacles
As Mr Gates met his Israeli allies, Mr Mitchell was in Cairo meeting President Hosni Mubarak - a day earlier than initially scheduled, apparently at Mr Mubarak's request.
Their meeting now comes ahead of Mr Mitchell's meeting with Palestinian President Mahmoud Abbas in the West Bank town of Ramallah - and the Egyptians seemingly have plenty to discuss, reports the BBC's Christian Fraser in Cairo.
They are currently brokering reconciliation talks between the deeply divided Palestinian factions of Fatah and Hamas.
Despite several rounds of talks, the two Palestinian factions are still at odds on the most divisive issues, the shape of a future unity government, the remit of the joint security force and the system that would be implemented for any upcoming elections.
Palestinian leaders have also refused to meet their Israeli counterparts until settlement activity ceases.
All settlements are illegal under international law, though Israel disputes this. Israel has settled more than 450,000 Jews in the occupied West Bank, including East Jerusalem.
'Candid' talks
As well as Mr Abbas, Mr Mitchell was due to meet Israeli Prime Minister Benjamin Netanyahu on Tuesday.
In Damascus on Sunday, Mr Mitchell met Syrian President Bashar Assad for what he called "very candid and positive" discussions on restarting long-stalled peace talks between Syria and Israel.
He said President Obama was determined to reach a comprehensive peace between Israel and all its Arab neighbours in order to guarantee "stability, security and prosperity".
Other senior US officials - National Security Adviser James Jones and the US envoy to the Gulf states, Dennis Ross - are also due to visit the region this week.
Mr Gates will follow his Israeli talks with a trip to Jordan for discussions with King Abdullah.
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