Israel believes that there is a chance for dialogue with Iran if Barack Obama succeeds in uniting the international community behind a common policy.

Shimon Peres, the Israeli President who arrives in London tonight, said that his country’s most implacable foe could be brought to the negotiating table depending on a new political climate and economic factors, in particular a falling oil price.

The veteran politician, who turned 85 this summer, also told The Times that he expected Israel to achieve peace with its Arab neighbours within his life time, and even predicted that he would one day visit Damascus and Riyadh.

His upbeat message will no doubt be dismissed by many in the Middle East as the musings of a lifelong optimist. Certainly no recent Israeli leader has expressed any positive view of Iran, whose nuclear policy and support for militant groups is regarded as the major existential threat to the Jewish state.

But Mr Peres insisted that he detected new opportunities in the region. He cited as an example his invitation to attend a multi-faith conference in New York last week, initiated by Saudi Arabia’s King Abdullah.

"If there will be a united policy on Iran and there is a new [lower] price for oil then Iran will have to come to terms with a proportionate reality of our times," said the Nobel-prize winning, former prime minister.

"If the Iranians feel there is a body politic behind [the push for talks] and they cannot just escape by sending [President] Ahmadinejad to spread quick wisdom, then there is a chance," he said, during his visit to New York last week.

He added that no progress was possible, however, until Iran met three conditions: to halt its controversial nuclear and ballistic missile programmes; to withdraw support for militant groups like Hamas and Hezbollah; and to stop the use of "terror".

His remarks coincided with a major US policy review over relations with Iran, which President Bush famously included in the "Axis of Evil". Barack Obama, the US president elect, has hinted that he is prepared for "direct diplomacy" with Tehran. There is even talk of opening a US interests section in Tehran, the first diplomatic mission since the Iranian Revolution in 1979, when the American embassy was seized by students and US diplomats held hostage for more than a year.

Mr Peres also held out hopes that Israel could conclude a "land for peace" agreement with Syria over the Golan Heights, captured by Israel during the 1967 Six Day War.

"I think Israel is ready to make peace with Syria and pay the cost," said Mr Peres, who confirmed that talks with Damascus were continuing. But he warned the regime of President Bashar al-Assad that peace was "not a cocktail" and that Israel would only accept a deal if Syria halted its support for militant groups like Hezbollah and Hamas.

"The problem with Syria is not so much the land but the peace," he said. "Several Israeli prime ministers indicated that they are ready to give back the land. But the Syrians do not indicate they are ready to provide peace," he said.

As for Britain, Mr Peres said that it could play an important role in the region, although he did admit being concerned about growing anti-Israeli sentiment in the country.

"I don't understand the criticism. Why are they criticising us? That war is an ugly story, we know it. I can assure them we did not invite it and we are not happy with it and as we have shown we are ready to pay the cost. I do not take their superior position. They do not go into the realities of the situation. They just want to be politically correct..." he said.

Much of the international criticism directed at Israel stems from the expansion of Jewish settlements on Arab land in the West Bank, the very territory that is meant to be the basis of a future Palestinian state. Here too, however, Mr Peres defended Israel’s position.

"We left Gaza. We dismantled, not by pressure but our own initiative, 30 settlements by force and look what happened. The minute we left Gaza, we left the settlements, some of them becoming bases for shooting rockets against Israel. The Israelis ask: 'Do you want us to do it again? To be targeted by missiles?" What right do they have to tell us? Why are they so surprised that we want to make sure it will not happen again?"

In the Arab world, Britain’s reputation suffered as a result of its involvement in the US-led invasion of Iraq. But Mr Peres said that from his perspective the British had nothing to feel ashamed of.

"The biggest failure in Iraq was not Britain but Saddam Hussein," said the Israeli head of state. "He was the greatest killer in the Middle East...You don’t have to apologise for trying to bring an end to it. Churchill does not have to apologise for bringing down another brutal dictator."

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