JERUSALEM, June 18 (Xinhua) -- Israel is interested in direct, bilateral talks with Lebanon in order to reach a peace deal between the two bordering countries, Israeli government spokesman Mark Regev said Wednesday.

    "Every issue of contention would be on the table, including a key border dispute over the Shaba Farms," Regev was quoted by local daily Ha'aretz as saying.

    Regev made the announcement as the United States has begun mediating between Israel and Lebanon in an effort to resolve their dispute over Shaba in the hope they would then start peace talks.

    U.S. President George W. Bush and Secretary of State Condoleezza Rice informed Israeli Prime Minister Ehud Olmert of this during his visit to Washington two weeks ago, and Rice repeated it during her visit to Israel earlier this week.

    The London-based Arabic daily Al-Hayat reported Tuesday that during her brief visit to Beirut on Monday, Rice told Lebanese officials that the United States was working to obtain an Israeli withdrawal from Shaba.

    "Our efforts are continuing, and will be stepped up in the coming weeks," Rice was quoted as saying.

    Shaba Farms are a small piece of land between 20 to 40 square kilometers controlled by Israel.

    The long-disputed Shaba Farms were claimed by Lebanon as its territory, while Israel says they are part of Syrian territory it conquered in 1967 along with the Golan Heights, and should be dealt with as part of negotiations with the Syrians, a position the UN supported in 2000.

    Following the Second Lebanon War two years ago, the UN agreed to set up a task force to determine where exactly the Lebanese-Syrian border lies.

    Next month, UN Secretary-General Ban Ki-moon will brief the Security Council on the implementation of Resolution 1701, which ended the Second Lebanon War. His report is expected to clarify the UN's position on the Shaba dispute.