Pakistan and Indonesia have agreed that Muslim countries must unite to resolve the violence in the Middle East.
Presidents Musharraf and Yudhoyono after their meeting
Presidents of the two countries meeting in Jakarta said they had discussed the turmoil in Iraq, the Palestinian territories, Lebanon and Afghanistan.
They agreed that new peace initiatives were needed urgently.
President Musharraf of Pakistan said a grouping of like-minded Muslim nations would be listened to, and the West would welcome any workable initiative.
"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.
Correspondents say that the president did not elaborate on the formation of such a group, but said King Abdullah of Saudi Arabia was being consulted.
The president's Indonesian counterpart, Susilo Bambang Yudhoyono, said that Indonesia planned to host an international conference of Muslim clerics.
He said that Shia and Sunni religious leaders from the Middle East had been invited.
"We need to achieve greater dialogue and consultation and a role of like-minded Islamic countries," he said. .
The two countries also discussed economic co-operation, and Pakistan's bid to become a dialogue partner of the Association of South East Asian Nations (ASEAN).
President Musharraf is now on his way to Malaysia for talks with Prime Minister, Abdullah Ahmad Badawi.