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Many in Netanyahu's government are deeply opposed to any steps against the settlers. "Outposts do not have to be dismantled now," said the interior minister, Eli Yishai. "There is rampant illegal construction on the part of Palestinians and Israeli Arabs. If we go for enforcement, then enforcement has to be unified, just and equitable."

Netanyahu, in an address seen as his response to Obama, refused to heed the U.S. call for an immediate freeze of construction on lands Palestinians claim for their future state. He also said the holy city of Jerusalem must remain under Israeli sovereignty.

''I call on you, our Palestinian neighbors, and to the leadership of the Palestinian Authority: Let us begin peace negotiations immediately, without preconditions,'' he said, calling on the wider Arab world to work with him. ''Let's make peace. I am willing to meet with you any time any place -- in Damascus, Riyadh, Beirut and in Jerusalem.''

''Our right to form our sovereign state here in the land of Israel stems from one simple fact. The Land of Israel is the birthplace of the Jewish people,'' he said.

''In my vision, there are two free peoples living side by side each with each other, each with its own flag and national anthem,'' he said.Netanyahu has said he fears the West Bank could follow the path of the Gaza Strip -- which the Palestinians also claim for their future state. Israel withdrew from Gaza in 2005, and Hamas militants now control the area, often firing rockets into southern Israel.''In any peace agreement, the territory under Palestinian control must be disarmed, with solid security guarantees for Israel,'' he said.

'If we get this guarantee for demilitarization and necessary security arrangements for Israel, and if the Palestinians recognize Israel as the state of the Jewish people, we will be willing in a real peace agreement to reach a solution of a demilitarized Palestinian state alongside the Jewish state,'' he said.

Netanyahu gave no indication as to how much captured land he would be willing to relinquish. However, he ruled out a division of Jerusalem, saying, ''Israel's capital will remain united.''

''We have no intention to build new settlements or expropriate land for expanding existing settlements. But there is a need to allow residents to lead a normal life. Settlers are not the enemy of the nation and are not the enemy of peace -- they are our brothers and sisters,'' he said.

Netanyahu also said the Palestinians must recognize Israel as a Jewish state. The Palestinians have refused to do so, fearing it would amount to giving up the rights of millions of refugees and their descendants and discriminate against Israel's own Arab minority.Although the Palestinians have agreed to demilitarization under past peace proposals, Erekat rejected it, saying it would cement Israeli rule over them.

Nabil Abu Rdainah, a spokesman for Mahmoud Abbas, the Palestinian president, dismissed the speech, saying: "Netanyahu's remarks have sabotaged all initiatives, paralysed all efforts being made and challenges the Palestinian, Arab and American positions."

Saeb Erekat, the Palestinians' senior negotiator, called on Obama to intervene to force Israel to abide by previous interim agreements that include freezing settlement activity in the West Bank. "The peace process has been moving at the speed of a tortoise. Tonight, Netanyahu has flipped it over on its backm," he said.

This is the first occasion that Netanyahu has endorsed the creation of a Palestinian state, but many see a disarmed Palestinian state as handing too much power to Israel. "Netanyahu did not accept the principle of a two-state solution," Lamis Andoni, Al Jazeera's Middle East analyst, said. "He reduced the concept of a Palestinian state to that of a demilitarised entity that would remain under Israeli control. 

"This is at best a formula to establish a Palestinian Bantustan that will not end the Israeli occupation but would legitimise Israeli control."

The Palestinians have said that they will not restart negotiations unless Netanyahu publicly backs the two-state solution and stops the building of Jewish settlements on Palestinian land.

He said there would be an end to new settlement building, but vowed that Jerusalem would remain undivided. Addressing Palestinian, Netanyahu urged them to recognise Israel as a Jewish state. "Israel is the nation state of the Jewish people and so it shall remain," he said.

The Israeli leader offered to talk to the Palestinians immediately and with "no preconditions".

"We want to live with you in peace as good neighbours," he said.

Agreeing the principle of a Palestinian state, he said Israel would "be prepared for a true peace agreement [and] to reach a solution of a demilitarised Palestinian state alongside the Jewish state". But only if "we receive this guarantee for demilitarisation and the security arrangements required by Israel, and if the Palestinians recognise Israel as the nation of the Jewish people".

Mr Netanyahu also said he was willing to go to Damascus, Riyadh and Beirut in pursuit of a Middle East peace deal.

Mr Netanyahu stuck to a similar line, saying: "The Palestinian refugee problem must be resolved outside the borders of the state of Israel. "Any demand to resettle refugees within Israel undermines Israel as a state for the Jewish people."

Another key issue the two sides have failed to agree on is the status of Jerusalem. Mr Netanyahu insisted the city must be the "united capital of Israel", although Palestinians want it divided to allow them to locate the capital of a future state there.

the issue of Palestinian refugees who fled or were forced from their homes in what is now Israel in 1948 and 1949. The Palestinians say they and their millions of descendants have the right to return to Israel - which would mean an end to its Jewish majority - but Israel has consistently rebuffed that demand.

Nabil Abu Rdainah, a spokesman for Palestinian Authority President Mahmoud Abbas, said the Israeli leader's speech "torpedoes all peace initiatives in the region".

Another Abbas aide, Yasser Abed Rabbo, told the AFP news agency that recognition of Israel's Jewish character was a demand for Palestinians "to become part of the global Zionist movement".

While the militant Hamas movement, which controls the Gaza Strip, said the speech reflected Mr Netanyahu's "racist and extremist ideology".

This visit marked Lieberman's first to the UN since he was appointed foreign minister.

Prime Minister Benjamin Netanyahu, a backer of Jewish settlers, insists that construction must be allowed to continue to accommodate natural growth of the settler population in the West Bank through births and marriages.

"It's not a main issue in our region," Lieberman said, adding: "If I try to compare what happens now in Iran and what happens in Afghanistan and in Pakistan to the problem of the settlements, it's very clear what ... must be the priority of the international community," Lieberman said Friday.

Netanyahu's endorsement of the idea of a Palestinian state listed a series of conditions rejected by the Palestinians - including a refusal to share control over the holy city of Jerusalem, demilitarization of a Palestinian state, and recognition of Israel as a Jewish state.

"We want to see a stop to the settlements," Clinton told reporters as she stood next to Lieberman, himself a settler. "We think that is an important and essential part of pursuing the efforts leading to a comprehensive agreement and the creation of a Palestinian next to an Israeli Jewish state that is secure in its borders and future," she said.

Mitchell has said a key element has been trying to pin down exactly what Israel means by the "natural growth." Netanyahu says he wants growing families to be able to accommodate their children in towns that Israelis have built on occupied land.

The officials, speaking on condition of anonymity, said allowances for continued building could be made if, for example, a project in a settlement was nearing completion or for cases in which money has been invested in a project and cannot be reimbursed.

To the IDF commander Dayan wrote, "I see this destruction and issuing of various decrees as very serious. It is collective punishment for the wrongful deeds of a few."

Palestinians have said they would not revive stalled peace talks with Israel unless its settlement activities stopped, that they have recognized Israel under past interim peace deals and that refugees must be compensated or resettled. "If settlement continues Israel will be allowed to build one thousand units here and two thousand units there, which will lead Arabs and Palestinians to believe that the American administration is incapable of swaying Israel to halt its settlement activities," Erekat told the radio. "The message is clear: settlements should stop immediately."

"There are no middle-ground solutions for the settlement issue: either settlement activity stops or it doesn't stop," Saeb Erekat told Voice of Palestine radio. Erekat said Palestinian President Mahmoud Abbas expressed that message in a letter Saturday to U.S. President Barack Obama.

Erekat was responding to reports Israel and the United States were discussing a compromise that would allow some building in existing settlements under what Israel terms "natural growth" to accommodate expanding families.

A U.S. official denied Wednesday a report in the Israeli daily Maariv that the Obama administration agreed work could continue on 2,500 housing units whose construction had begun, despite its call for a total freeze to spur peace efforts.

The European Union is one of the largest donors to the Palestinian Authority.

The commission says this year alone it has paid more than 200 million euros ($280 million) to help cover the Palestinian budget deficit

Kissinger: The important thing after military victory is to deal with the defeated nation in a generous way. SPIEGEL: And with this you mean not to subdue the defeated nation? Kissinger: You can either weaken a defeated nation to a point where its convictions no longer matter and you can impose anything you wish on it, or you have to bring it back into the international system. From the point of view from Versailles, the treaty was too lenient with respect to holding Germany down, and it was too tough to bring Germany into the new system. So it failed on both grounds.

SPIEGEL: What would a wise winner do? Kissinger: A wise victor will attempt to bring the defeated nation into the international system. A wise negotiator will try to find a basis on which the agreement will want to be maintained. When one reaches a point where neither of these possibilities exist, then one has to go either to increase pressure or to isolation of the adversary or maybe do both.

SPIEGEL: Were the Western countries wise in respect to their dealings with the former Soviet Union after their implosion? Kissinger: There was too much triumphalism on the western side. There was too much description of the Soviets as defeated in a Cold War and maybe a certain amount of arrogance. SPIEGEL: Not only towards Russia? Kissinger: In other situations as well.

Iran is a relatively weak and small country that has inherent limits to its capabilities. The relationship of China with the rest of the world is a lot more important in historic terms than the Iranian issues by themselves.

Binyamin Netanyahu, Israel's prime minister, has been pencilled in for a visit to the White House in the middle of next month. Netanyahu, since becoming prime minister, has refused to acknowledge the right of the Palestinians to a state of their own, as his predecessor had. But Obama yesterday stated firmly his commitment to the creation of an independent Palestinian state alongside Israel.

Mahmoud Abbas, the Palestinian president, is to make a separate visit, as is the Egyptian president, Hosni Mubarak. Egypt has been acting as a go-between between Abbas, who controls the West Bank, and Hamas, which controls Gaza.

Obama appears to have come round to the view of advisers that the US will ­effectively have to impose much of any deal on Israel and the Palestinians rather than wait for one to emerge from the two sides. He said yesterday: "I agree that we can't talk forever, that at some point steps have to be taken so that people can see progress on the ground. And that will be something that we will expect to take place in the coming months."My hope would be that over the next several months, that you start seeing ­gestures of good faith on all sides. I don't want to get into the details of what those gestures might be, but I think that the ­parties in the region probably have a pretty good recognition of what intermediate steps could be taken as confidence-building measures."

This morningelection officials in Moldova began a recount of votes, which was ordered by President Vladimir Voronin following the protests. The results of the recount will be announced on Friday.

"Not only did we underestimate the power of Twitter and the internet, we also underestimated the explosive anger among young people at the government's policies and electoral fraud," said Morar.

The demonstrations continued into Tuesday peacefully. But later that day, with no response from the government, protesters swept police aside to storm the parliament building and the towering presidential palace opposite. Fire broke out in one wing of the parliament, and the young protesters vented their fury by wrecking computers and office furniture.

Moldova, with a population of 4 million, is Europe's poorest country, and a large number of young people are forced to find work in the west.

She does not believe the current vendetta against her is purely the work of the Moldovan authorities, but sees the Kremlin's hand in it as well: "It was when Russia expressed strong support for Moldova's position on the elections, and condemned the protests, that they started targeting us."

Morar was expelled from Russia in 2007 after writing a series of articles accusing top Kremlin officials, including Alexander Bortnikov, the current head of the Russian security services, the FSB, of being behind the murder of Russia's central bank deputy head Andrey Kozlov in September 2006.

As the new prime minister, Mr. Netanyahu has tried to strike a more conciliatory tone, promising to hold negotiations with the Palestinian Authority toward a permanent accord. But he has also stopped short of endorsing the two-state solution, putting the new government at odds with the United States and the European Union.

Tony Blair, the special envoy of the so-called quartet of Middle East peacemakers, which consists of the United States, the European Union, the United Nations and Russia, said Wednesday that the peace process was in “very great jeopardy.”

He once advocated bombing the Aswan dam in the event of a war with Egypt, and last year he suggested that Egypt’s president should “go to hell” if he did not want to visit Israel.

Often contradictory and contrary in his positions, Mr. Lieberman, a resident of a Jewish settlement in the West Bank, has said that he advocates the creation of a viable Palestinian state. Yet in January 2008 he pulled his party out of the last governing coalition, led by Ehud Olmert and the centrist Kadima Party, in protest against the Annapolis-inspired talks.

Mr. Lieberman said on Wednesday that instead of Annapolis, Israel was committed to the “road map,” a 2003 American-backed performance-based peace plan that made the creation of a Palestinian state contingent on the Palestinians ending all violence and dismantling terrorist networks.Mr. Erekat, the Palestinian negotiator, noted that the plan also called for Israel to freeze all settlement construction. “I’d really like to know, are we going to see a settlement freeze?” Mr. Erekat said.

It remains to be seen whether Lieberman would be willing to accept a truly independent Palestinian state — Netanyahu has indicated that he won't, insisting, in the name of the Jewish state's security, that Israel control the air space and borders of such an entity, and have veto over its military and foreign policies. Netanyahu's track record, however, is also more pragmatic than ideological. Despite his open loathing of Yasser Arafat, his previous government in 1998 signed a deal with the late PLO leader for the withdrawal of Israeli forces from parts of the West Bank, including the sensitive biblical town of Hebron.

Publicly, at least, Netanyahu continues to take a hard line, rejecting the idea of an Israeli withdrawal from the Golan Heights in order to get peace with Syria. Lieberman talks only of "peace for peace," rather than land for peace. But Netanyahu knows that no peace deal is possible without returning the Syrian territory captured in the war of 1967, and he may be ready to find a formula for its return if Syria is truly ready for a peace deal.

Syrian President Assad, having established firm control of the often opaque regime he inherited from his late father, Hafez al-Assad, appears to be willing to pick up where his father left off in seeking a deal with Israel. Assad was instrumental in starting indirect, Turkish-mediated talks with Israel despite initial opposition by the Bush Administration

In the past, two former Labor Prime Ministers, the late Yitzhak Rabin and Barak, were ready to withdraw from almost all of the Golan Heights. Netanyahu himself may have been, too: during his first term as Prime Minister, he reportedly ran a back-channel negotiation with the Syrians.

President Obama recently sent two senior officials to Damascus to test the waters, signaling Washington's willingness to end its campaign to isolate Syria.

early success on the Israel-Syria track would do wonders for the Administration's wider Middle East ambitions. Not only would it formally cement the 40-plus years of relative calm on the Israeli-Syrian frontier, it would potentially detach Syria from its alliance with Iran, and enlist Damascus in moderating or eliminating two key radical elements — Hamas and Hizballah — on Israel's borders

Iran's resulting loss of influence in the region could, in turn, help induce Tehran to rethink its more confrontational positions, particularly on the nuclear issue.

Mr Shaath said the talks would resume between 21-26 April, without giving any further details.