Hosny Mubarak and Israel's Defence Minister met in the Mediterranean port city
of Alexandria on Tuesday for further talks, dpa reported.
The talks focused on the release of the captured Israeli soldier Gilad Shalit, kidnapped by Hamas-linked militants in a cross-border raid June 2006, the situation in the Gaza Strip and peace talks between Israel and the Palestinians.
Cairo has been leading negotiations for Shalit's release. Egypt's Foreign Minister Ahmed Abul Gheit told journalists that Barak had told Mubarak that the issue was very important to Israel, which regards Egypt as a central partner in efforts to return Schalit.
Palestinians from the radical Islamic Hamas group have refused to release the soldier unless hundreds of Palestinian prisoners, including several who were implicated in deadly attacks on Israelis, are released. Israel has so far refused.
Barak had also thanked Mubarak for his efforts to curb weapons smuggling into the Gaza Strip, Abul Gheit said.
Mubarak meanwhile asked the Israeli minister to improve the humanitarian conditions of Palestinians in the Gaza Strip, especially as the Muslim holy fasting month of Ramadan approaches.
Israel imposed a blockade on the enclave after Hamas seized control from the Palestinian Fatah group last June.
The nearly 2 million Gazans currently live amid a crippling shortage of basic supplies and services.
Egypt has stepped up its fight against smuggling into Gaza via tunnels along its border with Israel. More than 200 of the tunnels which are used to smuggle weapon and food have reportedly been discovered in the area this year.
The United States and Israel have been accusing Egypt of being reluctant to curb the smuggling of weapons into Gaza. A team of US specialists were brought to Egypt after the government appealed to the US for assistance in locating the tunnels.
Egypt was on Tuesday also hosting inter-Palestinian talks in a bid to help various Palestinian groups and factions settle their differences.
"Egypt has shown a genuine will to bridge the internal Palestinian gap," Mohamad al-Hindi, senior leader of the Palestinain Islamic Jihad group, which is taking part in the Cairo talks, told Deutsche Presse-Agentur dpa.
Al-Hindi told dpa: "Greater efforts are however needed to reconcile the splits, especially between Fatah and Hamas."
Egyptian officials are holding separate bilateral talks with representatives of the Palestinain Islamic Jihad, the Popular Front for the Liberation of Palestine (PFLP) and the Democratic Front for the Liberation of Palestine (DFLP).
An all-inclusive meeting that would include officials from Fatah and Hamas is expected to be held in Cairo on Wednesday.