Britain's ambassador to Israel strolls, unnoticed and unaccompanied, through Whitehall, a backpack slung casually over his shoulder. Rarely has one of Her Majesty's diplomats been so low-key and laid-back; though it should be noted that as a brand-new father - Matthew Gould's first daughter, Rachel Elizabeth, was born in Tel Aviv on April 1 - some of the ambassador's low profile could be attributed to lack of sleep.But in fact the envoy, in post since last Rosh Hashanah, is fizzing with ideas and positively bounces with enthusiasm about the opportunities for improving relations between Britain and Israel.

Gould, 39, made a small bit of history when he was appointed as the UK's first Jewish ambassador to serve in Tel Aviv, though he made it clear that he was there "as the British ambassador, not the Jewish ambassador".

Despite this, the boyish diplomat, his wife Celia never far from his side, embarked on an exhaustive series of appearances in Israel rarely matched by his predecessors in the post. Within days of his arrival, the Goulds were sitting in the tent established outside the Prime Minister's Office in Jerusalem by Noam and Aviva Shalit, the parents of kidnapped soldier Gilad Shalit. Since then, there has scarcely been a festival uncommemorated or, sadly, a funeral unattended.

At Purim, the Goulds hosted a huge fancy-dress party in their Ramat Gan home, attended by members of Israel's glitterati. For the Royal Wedding there was an equally ambitious bash which attracted 1,000 guests, from politicians to actors to footballers. Clearly the British ambassador is the diplomat du jour in Israel.

Yet behind all the glitz there is serious intent. Gould's latest project, supported by the outgoing Israeli ambassador to the UK, Ron Prosor, has been to raise funds to help poverty-stricken Holocaust survivors in Israel. When we meet, Gould has just got news of the latest donation to add to the £1 million already collected. "It's the donation I'm happiest with. We've just been given £25,000 from the 45 Aid Group, so that's Holocaust survivors helping Holocaust survivors. It lends the project moral authority as well as money, which is really nice."

The ambassador's clear sense of commitment is supported by his unforced and genuine grin when asked if Israel has, so far, lived up to his expectations. "Oh, yes. It's been every bit as interesting, intense, worthwhile, as I thought it was going to be. Nothing has been a massive surprise, but it has been very fulfilling. We knew we were going to enjoy it . We had a huge affection for Israel beforehand, and that's basically been reinforced."

There have been some surprises, he confesses. "There is the vibrancy of Israel's economy and hi-tech sector. You read about it, but I spend a day every month in Israel's universities, talking to scientists. Every time I do, it blows me away, what's being done. But in the less positive category, some of the divisions in Israeli society are deeper than I remembered them, and that gives me some concern and makes me think it's something which we ought to try and help with. I'm thinking of divisions between secular and Charedi, between Jew and Arab, between the centre and the periphery. I think the second intifada had a very corrosive effect on trust between Jews and Arabs within Israel.

"Obviously Israel's future lies in harmony between its communities. And so when attitudes between communities harden into mutual suspicion, it's troubling."

Right at the heart of Gould's mission is the peace process, and he is one of the core diplomats in the seemingly never-ending dance between Israel and the Palestinians. Slightly wearily, he concedes that the peace process, now, "is lacking momentum. An upsurge in violent incidents has caused people to take a position where they are less inclined to take risky, bold steps. The turmoil in the region has led some people to conclude that now is a very bad time to try and make peace. But that is actually the reverse of the British position. Now is precisely the time Israel should try to take the bold steps towards peace, because political systems all over the region are re-forming themselves, and you don't want them to solidify at a moment of minimum hope in the peace process - because you guarantee, then, that in each country where that happens, their position towards Israel is going to be least friendly.

"Long-term, I think there is still a coincidence of views around the two-state solution, greater than there has ever been. The question is how you get from where we are today, with no negotiations and a great deal of mutual suspicion, to where you need to be, with the parties talking to each other, and working out how to give reality to the end goal."

The ambassador sees his work as two-fold: to do whatever he can to push forward the peace process, and to do whatever he can to make relations between Britain and Israel "of maximum benefit on both sides. So a lot of what I do is building that partnership, making sure that Israel is the partner for Britain, that Britain is the partner for Israel. Hence the work I've been doing with science, with hi-tech… any number of avenues.

"In terms of the peace process, I can give the best possible analysis I can of the Israeli political debate, for the Prime Minister and the Foreign Secretary, so that they understand where Israel is coming from. Absolutely crucially, I can help explain Israel's deep-rooted security concerns. It's a statement of the obvious, to me, that the Israeli people will make compromises when they think those compromises will make them more secure, not less secure. So I think understanding Israel's security needs is absolutely critical to helping Israel find peace. The two are intimately bound up with each other. Israel has a right to expect its friends to take its security seriously, and that that just won't be rhetorical."

If Matthew Gould has a mantra, it is "Never lose patience". Plainly there are back-door disagreements, but part of the diplomat's armoury is an ability to see a long-term picture, to wait, to persuade, to support, and ultimately win the prize.

He is, by nature, upbeat and optimistic. "We have done some fantastic things. We launched the UK-Israel Life Sciences Council, and had 15 of the most eminent British and Israeli scientists in the room discussing the nature of our collaboration. We have launched an ambitious fund to promote UK-Israel joint research in regenerative medicine. We are setting up a hi-tech hub inside the British embassy that will focus on a dedicated team to build partnerships between Britain and Israel. Celia and I have travelled all over the country: horse-riding, scuba-diving… we've met the most extraordinary range of people. This isn't just a Ferrero Rocher lifestyle. It's designed to build links and make friends."

Israel's curse and blessing, says the ambassador, "is that it's not a normal country." But he is quietly confident that he can do whatever is possible to improve the balance - on the blessing side.