Mr Annan said both Israel and Hezbollah have agreed to negotiate the release of the two Israeli soldiers captured at the start of the conflict and he's appointed a mediator to secure a deal.
Hezbollah has demanded Israel release Lebanese prisoners in exchange for the servicemen but the Israeli government has made it clear it won't negotiate directly with the militant movement which it considers a terrorist organisation.
Three-step process
In an interview with The New York Times published Wednesday, Mr Annan outlined a three-step process he hopes will end with the lifting of Israel's blockade of Lebanon within 48 hours.
The first step was France's agreement in principle Tuesday to a Lebanese request to take part in monitoring the Lebanese coastline.
President Jacques Chirac's office confirmed the agreement, which it said was reached after Mr Annan passed on Lebanon's request in a telephone conversation with Mr Chirac late Monday.
The second step in the plan, Mr Annan said, was having Lebanese Prime Minister Fuad Siniora write him a letter formally authorising the Germans to take up their positions off Lebanon.
In this regard, the UN chief said there was disagreement over timing between Mr Siniora, who wants the blockade lifted before he authorises the German deployment, and Israeli Prime Minister Ehud Olmert, who wants the Germans officially committed before he lifts the blockade.
Mr Annan said he hoped the temporary presence of French, Italian and Greek ships would convince Israel that no weapons would be smuggled to the Hezbollah militia if the blockade is lifted.
The third and final step in the plan, said Mr Annan - who is not quoted directly by the newspaper - was an Israeli announcement that it will lift the blockade.
Mr Annan’s tour aimed to shore up a fragile truce in Lebanon and rekindle regional peace efforts after Israel’s 34-day offensive against Hezbollah.
Gulf ministers’ meeting
The UN chief’s announcement was shortly followed by a similar call for Israel to end its blockade from a meeting of foreign ministers from the six oil-rich Gulf Arab states.
The Gulf Cooperation Council, consisting of ministers from Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, met for talks in the Saudi Red Sea city of Jeddah.
The council pledged to "continue their support for Lebanon and contribute to its reconstruction as part of a common Arab effort."
The Lebanese government has said the country sustained some US$3.6 billion in material losses as a result of the Israeli offensive that ended on the 14th of August.
Ministers at the meeting demanded that Israel also free imprisoned Palestinian ministers and MPs from Islamic militant group Hamas.
Israel detained Hamas elected officials after the group claimed co-responsibility for a cross-border raid in June in which an Israeli soldier was captured.
The council warned that the security of the Middle East was dependent on a "swift, just and comprehensive settlement of the Israeli-Arab conflict and the Palestinian question."
Another meeting of 19 Arab foreign ministers is scheduled for Wednesday in Cairo.
Ministers will meet to discuss the role of the United Nations in the Middle East peace process ahead of a Security Council meeting in September.
Turkey troop commitment
The Turkish parliament has authorised the government to send troops to the UN force in Lebanon, after fierce parliamentary debate and widespread opposition and protests.
A government motion to contribute troops to the UN Interim Force in Lebanon (UNIFIL) was backed by 340 of the 533 lawmakers present in the 550-seat house.
According to the deputy speaker Nevzat Pakdil another 192 voted against the motion and one abstained.
Under the motion, Turkey will send a naval force to patrol the eastern Mediterranean, deploy troops, help train the Lebanese army and support allied countries in naval and air transport.
The motion anticipates a one-year deployment, but it is not yet clear how many troops will be sent, nor when and where.
Turkish Foreign Minister Abdullah Gul has said the number of soldiers is not likely to exceed 1,000.
Details of the deployment were expected to become clearer after talks between Turkish leaders and visiting UN Secretary-General Kofi Annan on Wednesday who arrived in Ankara just hours before the vote.