Chirac, in what is likely to be one of his last major foreign policy addresses before April presidential elections, repeated his criticism of the U.S.-led war in Iraq. He told diplomats in Paris that the situation risked spilling over into wider conflict.
"As France feared and warned, the war in Iraq set off upheavals whose effects have not yet been fully played out," he said, adding that conflict in the wider region could produce a confrontation "on an unimaginable scale."
"The Israeli-Palestinian conflict crystallises all these resentments," he said.
He said the international community had to act to restore the peace process and backed proposals to revive the so-called "Quartet" of Middle East mediators: the European Union, Russia, the United Nations and the United States.
"Let us propose within the Quartet an international conference of a new type which, without presuming to dictate the terms of a settlement to the parties, would bring the guarantees to which they aspire," he said, according to the text of his speech.
"I firmly believe there can be a real impetus for negotiation."
Chirac also backed German Chancellor Angela Merkel's drive for progress on reforms to make decision-making easier in a European Union that now counts 27 members.
"Everyone today can see the urgent need for reform," he said, adding that any solution would have to take into account the concerns over the bloc's powers raised by the rejection by French and Dutch voters of the proposed constitution in 2005.
Germany, which assumed the rotating presidency of the bloc at the start of the year, has made reviving the reform a top priority.
Welcoming the EU's new members, Romania and Bulgaria, Chirac said the 50th anniversary of the signing of the founding Treaty of Rome, due to be celebrated in Berlin later this year, was a major opportunity to reach a new consensus.
France is expected to continue the work begun by Germany when it takes over the EU presidency in 2008, although by then Chirac is expected to have left the scene he has helped shape over more than a decade in power.