Mark Regev said there are 'genuine reasons for hope' for a peaceful accord between Israel and the Arab world – which could move the country forward in its relations with Palestinians.
He said that the 'common threat' of extremism had brought Israel and Arab countries closer together, and that its Government was now in talks with more administrations from neighbouring nations than ever before.
It came as tensions in the region have heightened in recent weeks, following a series of killings around the Gaza Strip and clashes between Hamas – the defacto government of Gaza – and Israeli Defence Force soldiers.
Speaking exclusively to the Express & Star during a visit to the West Midlands, Mr Regev said: "It's not that I am naive, but I believe there are genuine reasons for hope that things can get better in terms of a path to a more peaceful set of relationships between us and our neighbours.
"We have seen a substantial improvement in our relationships with our Arab neighbours over the last half a decade. We have had peace with Egypt for 40 years and with Jordan for 25 years.
"We have now got talks with a whole series of other Arab countries. Common threats have brought us and the Arabs together.
"We all feel threatened by the forces of extremism. Whether it is the Sunni variety with groups like Isis and Al-Qaeda, and I would include in that the Muslim Brotherhood. Or it's the Shia extremism of countries like Iran, and Hezbollah.
"This position is new, and it is very exciting for Israelis, because countries that have for years seen us as the enemy, are more and more seeing us as a partner and even as an ally."
Mr Regev added that Israel was open to building on its 'new relationships' with Arab governments.
"Today we are talking to more of them than ever before in the history of the Jewish state," he said. "The question is can we cultivate those relationships to build a more peaceful region?
"And also to use those new relationships to help us move forward with the Palestinians.
"That's the challenge. There is an openness to Israel today that wasn't there in the past."
He described recent incidents in the Gaza Strip as 'not violence we want to see', and added: "Hopefully now we are coming out of that."
He blamed Hamas for 'encouraging violence', and said: "We have to defend our borders and cannot allow hostile infiltration.
"The Hamas leadership are stuck in a very military position. That is the core of the problem. If the people of Gaza could choose, I am convinced they would choose to live in peace and cooperation with Israel.
"Hamas could start another war. We would be irresponsible to ignore them, but we must look to the opportunities. And there are serious opportunities.
"Ultimately the Palestinians are an integral part of the Arab world. If the Arab world is more open to Israel then it has to effect Palestinian thinking too.
"Israel is a young country but a successful country. There are a lot of good things going on. We have a robust democracy and our economy is one of the fastest growing in the developed world.
"But we lack peace and recognition with our neighbours. That's the ultimate prize. Maybe we are closer than that than ever before.
"As Israel improves our relations with the Arab world, that can actually help us with peace."
Mr Regev spoke to students at the University of Birmingham during his visit to the region.