Israel's prime minister has said the Arab plan contains positive elements.
"We are extending a hand of peace on behalf of the whole region to you, and we hope that we will be able to create the momentum needed to resume fruitful and productive negotiations," said Jordan's Abdullah Khatib.
Mr Khatib said Israel needed to agree on a precise timetable "not to waste this historic opportunity".
Egypt and Jordan have peace treaties with Israel and have sent many delegations there, but never on behalf of the Arab League.
Mr Khatib and Egypt's Ahmed Aboul Gheit are presenting a long-standing Arab League initiative that was readopted at a meeting in Saudi Arabia recently.
But Olmert said there were "no precise timetables or stages established yet".
Israeli foreign ministry spokesman called the visit historic, saying: "In the past, the Arab League has opposed dialogue, normalisation and any contact with Israel and this is the first time the Arab League has authorised a delegation to visit Israel."
"They are not acting under the banner of the Arab League. They are not going on behalf of the Arab League nor have they been sent as delegates by the Arab League.
"They represent two Arab countries that for certain circumstances entered into peace accords and official diplomatic relations," he said.
On Wednesday, the Israeli Haaretz newspaper said Israel was considering an "an agreement of principles" with Palestinians that could establish a Palestinian state on 90% of occupied territory.
The paper said Israel would propose a tunnel linking the West Bank and Gaza, while there would also be a territorial exchange allowing Israel to keep its main Jewish settlements.
In other moves, King Abdullah of Jordan met President George W Bush at a private dinner in Washington.
Meanwhile, Mr Blair continued his tour of the region with visits scheduled for Bahrain and Abu Dhabi on Wednesday.