The White House said CIA chief William Burns was among US officials taking part in the discussions in Cairo, joining the heads of Israel's spy agency and security service.
"There has been progress made. We need now for both sides to come together and work towards implementation," US National Security Council spokesman John Kirby said.
Preliminary talks which began on Thursday evening "were constructive in nature", he said, adding that reports that the diplomacy was "near collapse" were inaccurate.
Representatives of Palestinian resistance group Hamas were not taking part in the Cairo talks.
An official from the resistance movement, Hossam Badran, told AFP Friday that Israeli Prime Minister 's insistence that his troops remain on a strip of land along the Gaza-Egypt border called the Philadelphi Corridor reflects "his refusal to reach a final agreement".
Egypt with fellow mediators Qatar and the United States have for months tried to reach a deal to end more than 10 months of Israel's war on the Gaza Strip.
Previous optimism during months of on-off truce talks has proven unfounded.
Fighting raged on in Gaza, where witnesses reported combat in the north of the territory, heavy shelling in the centre, and tank fire in the far south near Rafah city.
The United Nations said tens of thousands of civilians have been on the move again this week from Deir el-Balah and the southern city of Khan Younis after Israel forced the evacuation, which precede army attacks.
The Israeli war has displaced virtually all of Gaza's population, often multiple times, leaving them deprived of shelter, clean water and other essentials as disease spreads, the UN says.
'This cannot continue'
"Civilians are exhausted and terrified, running from one destroyed place to another, with no end in sight," Muhannad Hadi, the UN humanitarian coordinator for the Palestinian territories, said late Thursday.
"This cannot continue," he said.
The Israeli military claimed that over the previous 24 hours troops had "eliminated dozens" of militants around Khan Younis and Deir el-Balah.
Israel's brutal war on the Gaza Strip since Oct.7, has killed at least 40,265 Palestinians, with another 93,144 wounded. The UN rights office says most dead are women and children.
'Now is the time'
Diplomatic efforts to reach a Gaza truce and avert a wider war intensified following the Israel assassinations of Hamas political leader Ismail Haniyeh in Tehran and a top Hezbollah commander in Beirut last month that sparked threats of reprisals from Tehran.
Lebanon's Hezbollah movement and Israeli forces have exchanged near-daily cross-border fire since the Gaza war began.
Accepting her Democratic party's presidential nomination in Chicago, US Vice President Kamala Harris said "now is the time to get a captive deal and a ceasefire deal done".
The basis of talks has been a framework which US President Joe Biden outlined in late May, and which he described as an Israeli proposal.
The three-phase plan would initially see captives exchanged for Palestinians in Israeli jails during what Biden called a "full and complete ceasefire" lasting six weeks.
Israeli forces would withdraw from "all populated areas of Gaza", under the plan.
US Secretary of State Antony Blinken visited the Middle East this week and said that Netanyahu was onboard with a US proposal to bridge gaps and reach a ceasefire.
However, the office of Netanyahu, whose hard-right coalition relies on the support of members opposed to a truce, rejected as "incorrect" media reports that "Netanyahu has agreed that Israel will withdraw" from the Philadelphi Corridor.
Badran, the Hamas official, on Friday reiterated that Hamas "accepted the Biden plan" as originally outlined and said Washington must pressure Netanyahu for a ceasefire.
He said Hamas will accept "nothing less than the withdrawal of occupation forces, Philadelphi included".
* This story was edited by Ahram Online.
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