"We need urgently to conclude a ceasefire that can endure and that can bring real security," Rice told the UN Security Council. "In this regard we are pleased by and wish to commend the statement of the president of Egypt and to follow up on that initiative," she added.
But Rice made clear the United States insisted on a ceasefire that was "durable and sustainable" and would not result in a return to the situation on the ground before Israel launched its air and ground offensive 11 days ago in response to Hamas firing rockets deep into the Jewish state.
"A ceasefire that returns to those circumstances is unacceptable and will not last," said Rice.
A senior US official said while the United States backed Mubarak's initiative, including his invitation to Prime Minister Ehud Olmert to work together on a ceasefire, the United States would not back down on its basic principles of a ceasefire.
The Bush administration is pressing for a ceasefire that would include three elements: a halt to rocket attacks from Gaza, the opening of border crossings into the territory and an end to smuggling into the area through tunnels from Egypt.
Rice, who leaves office in less than two weeks, called for global efforts to rebuild Gaza and called for an international donors conference to tackle the challenge.
"The United States remains deeply concerned about innocent Palestinians and Israelis who are suffering. In that regard, let me assure you, we understand the urgency of an end to the fighting and that we are working around the clock to bring an end to the violence," she said.
France, Turkey willing to give monitors
The Mubarak announcement received explicit backing from Palestinian President Mahmoud Abbas. Israeli Ambassador to the UN Gabriela Shalev made no reference to the proposal in her speech to the council.
The meeting ended without a formal resolution, and the Security Council is scheduled to reconvene on Thursday.
Abbas criticized Israel for ignoring calls from around the globe for an end to its military campaign in Gaza - and for the large number of civilian deaths it has caused.
"The Israeli machine of destruction continues to kill, to commit the most heinous of possible crimes despite international unanimity, an unprecedented unanimity in calling for an end of this massacre against innocent civilians that do not deserve such brutality," Abbas said.
Shalev defended Israel's military action in Gaza, saying Hamas "has no interest in making peace" and only wants to inflict terror on Israel and "tyranny" in Gaza, where its forces hide among innocent civilians.
"We have to defend ourselves," she said. "It is about insuring the end of terrorism in Gaza, and the end of smuggling in weapons to Gaza."
Other top diplomats attending the council meeting were British Foreign Secretary David Miliband and senior Arab officials like Saudi Foreign Minister Prince Saud Al-Faisal.
Earlier on Tuesday, Israeli fire killed at least 30 Palestinians at a UN school in Gaza where civilians had taken shelter.
UN Secretary-General Ban Ki-moon said the attacks on the schools were "totally unacceptable and should not be repeated." He said he would travel to Israel and the Palestinian territories next week to support efforts to end the crisis.
Abbas reiterated Palestinian calls for the council to quickly adopt a resolution demanding an immediate ceasefire in Gaza. But Western council members said a text may not be ready for a vote until next week.
France and Turkey said they were willing to contribute to an international monitoring team for a ceasefire in Gaza.
"International monitoring mechanisms might prove necessary and we are willing to contribute to this," French Foreign Minister Bernard Kouchner told the UN Security Council session.
Kouchner said France was awaiting Israel's response to a ceasefire proposal announced by Egypt's President Hosni Mubarak after a meeting with French President Nicolas Sarkozy and "we harbor hope that it will be a positive one."
Turkish Foreign Minister Ali Babacan also said his country, which has been active in trying to end the violence in Gaza, would be prepared to contribute monitors.
"If Turkey is asked to be in such an international monitoring team, we are going to be of course willing to be there," Babacan told reporters before the special UN session.