"We reviewed the turmoil in Palestine, in Iraq, in Lebanon, in Afghanistan and we both have consonance of views in a requirement of a new initiative," Pakistani President Pervez Musharraf told a joint news conference in the Indonesian presidential palace.

Such a grouping of "like-minded" Muslim countries would be welcomed and listened to, Musharraf added.

"Since the West is looking and searching for methods and new ideas of bringing peace to the region I think any new idea, any new initiative would be acceptable to them as long as it is workable," he said.

The Pakistani President didn't provide more details about the group, but said that Saudi Arabian King Abdullah was being consulted.

For his part, Indonesian President Susilo Bambang Yudhoyono said: "we need to achieve greater dialogue and consultation and a role of like-minded Islamic countries" in order to restore peace to the Middle East.

He said Indonesia, the world's most populous Muslim nation, plans to hold an international meeting of Ulemas, or Muslim scholars, to discuss the current conflicts in the Islamic world.

Last week, an Indonesian official said that Jakarta wanted to hold a special meeting with the Palestinian ruling party Hamas this year aimed at ending internal rifts among Palestinian factions. However, the Indonesian president didn't mention this meeting on Wednesday.

"Action needed now"

Both Musharraf and Yudhoyono face growing pressure at home to take a bigger role in the Middle East.

The Pakistani president, who later flew to Malaysia for a meeting with Prime Minister Abdullah Ahmad Badawi, said action was needed now. "We both felt that the time has come for action and there is no room for complacency, because things are moving so fast, deteriorating so fast," he said.

Yudhoyono said that Indonesia and Pakistan face a similar threat from terrorism. "We have to deal with this threat properly, not only directly combating the act of terrorism, but also addressing the root causes of terrorism," he said.

The two countries are close U.S. allies, but have differences over some of Washington's policies, particularly in the Middle East.

Meanwhile, Pakistan's foreign minister said Musharraf discussed similar issues with the Malaysian prime minister.

"The idea was to discuss matters with like-minded countries, matters pertaining to the Middle East, which have a bearing on terrorism, and also the situation in Iraq," Khursheed Mehmood Kasuri, who accompanied Musharraf, told Reuters.

"At the moment it is the question of brainstorming, discussing ideas and this was in continuation of the meeting the president just had with other countries," Kasuri said.

Abdullah, current chairman of the 57-member Organization of the Islamic Conference (OIC), made no comment after the talks