Cairo  - British Foreign Secretary David Miliband, speaking in Cairo Wednesday, called the establishment of a "viable and strong" Palestinian state crucial to the security of Israel and the Middle East.

Speaking to reporters after meeting with Egyptian President Hosny Mubarak, Miliband applauded Egypt's role in brokering ceasefire talks between Israel and the Palestinians.

He urged Palestinian factions to form a national unity government, and called for the creation of a Palestinian state along Israel's 1967 borders.

"As Egypt recognized, a secure Israel is a vital part of a stable and secure Middle East," Miliband said, adding that he believed that the Middle East would be "more secure with a viable and strong Palestinian state."

"We say very clearly that the settlements are illegal, that a Palestinian state should be based on the 1967 borders, and that Jerusalem should be the capital of both states," Miliband responded when asked about Britain's policy on Israeli settlements in the West Bank.

He also called on Arab countries to stand by commitments they made in a Saudi-sponsored peace initiative an Arab peace initiative first presented at the Arab League summit in Beirut of 2002 and relaunched in Riyadh in last March.

"I think it is very important that all the countries in the region are able to stand by the commitments of the Arab peace initiative, which offers Israel security in the region" and the normalization of its relations "with all Arab countries in return for the creation of a Palestinian state," Miliband said.

EU foreign policy chief Javier Solana was also expected to arrive in Cairo late Wednesday ahead of a March 2 summit bringing together donor countries to discuss providing aid for the reconstruction of the Gaza Strip following Israel's 22-day offensive in late December and early January. dpa