Israel is prepared to make "painful compromises" as part of efforts to achieve peace with Palestinians, Prime Minister Benjamin Netanyahu has said.
Palestinian leaders quickly dismissed the Israeli leader's terms for an agreement, suggesting stalled talks between the two sides are unlikely to recommence soon
Mr Netanyahu outlined his stance during a warmly received speech to the US Congress - just a week after a testy exchange with President Barack Obama.
He said that before talks began once again, Palestinians must recognise Israel as the homeland of the Jewish people.
And he also insisted Western-backed Palestinian President Mahmoud Abbas' must scrap his accord with the Islamist movement Hamas.
"Tear up your pact with Hamas. Sit down and negotiate. Make peace with the Jewish state," he said.
"I am willing to make painful compromises to achieve this historical peace. As the leader of Israel, it is my responsibility."
"It's not easy because I recognise that in a genuine peace we will be required to give up parts of the ancestral Jewish homeland," he said, referring to the occupied West Bank.
He also suggested for the first time that Israel would cede some Jewish settlements in the West Bank, although others would be annexed under any future agreement.
He said: "In any peace agreement that ends the conflict, some settlements will end up beyond Israel's borders. The precise delineation of those borders must be negotiated."
Nabil Abu Rdainah, a spokesman for Mr Abbas, said the Israeli leader's vision for ending the conflict put "more obstacles" in front of the Middle East peace process.
"What came in Netanyahu's speech will not lead to peace," he said.
He had earlier promised to reveal the "unvarnished truth" about his country's attempts to strike a lasting peace deal with the Palestinians.
Mr Netanyahu also told Arab countries to stop blaming Israel for the conflict in the Middle East, saying they must accept their share of the responsibility.
Addressing the powerful American Israel Public Affairs Committee (Aipac), a pro-Israel lobby group, Mr Netanyahu reignited his dispute with Barack Obama over the shape of a future Palestine.
"(A peace agreement) must leave Israel with security, and therefore Israel cannot return to the indefensible 1967 lines," he said, repeating a term he had used at a testy meeting with the US President at the White House on May 20.
Mr Obama angered Israelis when he suggested the day before a Palestinian state in the occupied West Bank and Gaza Strip should largely be drawn along lines that existed before the 1967 war in which Israel captured those areas and East Jerusalem.
On Sunday, in his own address to Aipac, Mr Obama eased tensions a little when he made clear Israel would be able to negotiate keeping some settlements as part of a land swap in any final deal with the Palestinians.
Peace talks have stalled, largely over the issue of Israeli settlements in the West Bank.
Neither Mr Obama nor Mr Netanyahu has put forward concrete proposals for getting the two sides back to the negotiating table.
Another sticking point has been Mr Netanyahu's insistence that Palestinians recognize Israel as a Jewish state.
The Israeli leader is expected to have a mostly sympathetic ear in the US congress, where few politicians from either party speak up for the Palestinians.
"Support for Israel doesn't divide America, it unites America. It unites the old and the young, liberals and conservatives, Democrats and Republicans," Mr Netanyahu told Aipac.