"We are currently conducting negotiations with both the Palestinians and the Syrians, and there is no reason whatsoever why Israel should not be negotiating with the Lebanese," Prime Minister Ehud Olmert's spokesman, Mark Regev, said, according to news services.
In the past, Lebanon has refused to enter open talks, stating that Israel must first withdraw from a sliver of disputed territory known as Shebaa Farms.
Last week, the Lebanese government said Israel must also return Lebanese prisoners and provide maps to mines and cluster bombs left over from the 2006 war between Israel and Hezbollah, the powerful Lebanese guerrilla group, the New York Times reported.
But on Monday, U.S. Secretary of State Condoleezza Rice made a surprise visit to Lebanon, where she said "the time has come to deal with the Shebaa Farms issue."
Meanwhile, Hezbollah and Israel have been finalizing an agreement to exchange prisoners, Reuters reported. A six-month truce in Gaza between Israel and Hamas, the Palestinian militant group, is scheduled to begin Thursday.
However, Palestinian militants fired 50 rockets and mortars toward Israel on Wednesday, and Israel responded with airstrikes in Gaza just hours before the truce was to take effect, illustrating how fragile the cease-fire between Israel and Hamas would be.
Separately, Syria and Israel revealed last week that they have been conducting indirect talks through Turkish mediators regarding the return of the Golan Heights, captured in the 1967 Middle East war.
"If there is an Israeli embassy in Damascus, things will change," Olmert said in an interview with France's Le Figaro newspaper. "That will also make a difference in Lebanon. If we negotiate with Syria, why not with the Lebanese prime minister, Fouad Siniora?"
Olmert's critics accuse him of using this intense flurry of diplomacy in the region to divert attention from a corruption scandal which has led to calls for his resignation. Olmert has denied any wrongdoing, but has pledged to quit his post if indicted in a criminal investigation of funds he received from a U.S. businessman.