The US has urged Mr Netanyahu to accept a "two-state" solution
Israeli Prime Minister Benjamin Netanyahu has announced he will accept a Palestinian state - but only if it has no army, no control of its air space and no way of obtaining weapons.
He added that the Palestinians must accept Israel as a Jewish state.
But Palestinian leaders have reacted angrily, accusing Mr Netanyahu of sabotaging peace plans.
BBC News readers have been responding from around the world with their reaction to Mr Netanyahu's speech.
I think it was the right move from Netanyahu's and current government side to promote the peace process. There are some parts in the speech I disagree with. Even though I'm a Jew who lives in Jerusalem and plans to keep on living in Jerusalem I wouldn't mind dividing the capital in the future and making the old city an international zone, but only under the terms that the freedom of religious practice would be maintained and security will be guaranteed to everyone.
Eitan Tsuk, Jerusalem
Netanyahu also didn't mention the fact that few of the settlements are very deep inside Palestinian territory (North of Ramallah and south of Beit-Lehem), and the settlers there have to be moved or to live in the Palestinian future state. This entire time people have been pushing for Israel to recognise the right for a Palestinian state, I think it only just that Palestinians recognise the right for a Jewish state.
First of all, no Arab politician will accept this position, because their goal is not peace but land - all the land. So he is not talking to the Arabs, but to the West, using the same double-talk the Arabs do. However, by not stating a firm ideological justification for a Jewish state, he is presenting another block to peace, by giving the Arabs and the West the hope that Israel will collapse under pressure.
Israel Dalven, Emanuel
The PM's speech is bunk. It is not up to the Palestinians to define the nature of Israel or intervene in its internal affairs. This was a peace offering to President Obama served up with a wink. I hope that the president will not wink back as Bush etc., did. He avoided the issue of building in the existing settlements in the hope that the gorilla in the living room will go away. It will not.
Aharon Eviatar, Hofit
Although I'm not a big fan of Mr Netanyahu and didn't vote for him, I have to say that a huge majority of the Israeli public stands behind the views he expressed in his speech. The fact is most of us Israelis really share an honest and deep longing for peace with our neighbours and we are willing to make the painful compromise necessary for that. The ball is in the Palestinian side of the court now.
Eyal Aviv, Ashkelon
FROM THE PALESTINIAN TERRITORIES
Demanding the Palestinians to accept Israel as a state for the Jewish, this man is insane in claiming Israel is a democratic nation and then demanding it to be a Jewish state, not forgetting denying all those Palestinian who was born and has lived there the right of return. It just tells you a lot about this man ideologies and mentality
Sami Beddo, Hebron, West Bank
This is a speech that completely ignores Palestine's basic rights. The Israeli authority is pleased at watching our miserable lives. Do they forget we are human beings? Why aren't we allowed a Palestine free state?
Kedir, West Bank
In the end, Mr. Netanyahu is not offering something that would be a considerable option for the Palestinians, and the fact that he now accepts the "idea" of a neighbouring Palestinian state is by no means a step forward, for previous Israeli governments have already recognised that starting the Oslo Accords in 1993.
Natasha Aruri, Ramallah, Palestine
It is a futile speech that reflects a sick mentality driven by hatred and abhorrence. He wants the Palestinians to live in ghettos. He is only beating about the bush.
Luai Abu Eideh, Nablus
Netanyahu has proved once again that he is a demagogue by asking the Palestinians to recognise Israel as a 'Jewish' state. His demand is both absurd and racist. The Arabs need to withdraw their so called peace initiative. Netanyahu represents the increasingly fanatical mind set which is gaining strength as we have seen in the last elections. Israel has no interest in any accommodation with the Palestinian people. Its only objective is to build more settlements.
Issam Abu Roza, Jerusalem
There can be no Palestinian state while there are hundreds of Israeli enclaves behind the green line. The settlers not only have roads, IDF detail, and ease of economic development at their disposal, they also have access to an unlimited supply of water, power, and other natural resources which belong to the Palestinians. While the people of Nablus must wait up to four days for their water tanks to be refilled, the settlers in and around Nablus play in their swimming pools and water their lawns.
I am living in the Palestinian Territories. I think it is a good step that he agrees to have a Palestinian state next to Jewish state but there are many things to consider like the wall, freedom of movement and the refugees.
Bishara Nassar, Bethlehem
REST OF THE WORLD
It's a great start for a leader of that party to offer onto the table especially as part of his campaign was to build on West Bank settlements. Let's see if the other two Palestinian governments will take up the challenge and opt for peace and a decent way of life for their people.
This is the best way forward in resolving such a complex issue. If Palestinians want peace then they have to abide by this policy in order to ensure that they don't pose a threat to the Jewish state. They have a questionable past in their threats and attacks on Jewish settlement and the only way forward is to accept this proposal from the Israeli PM.
Nick, Accra, Ghana
I think Mr Netanyahu's comments would incite any nation to take up arms. We all want the right to defend our country, to fight for our country. A country that is occupied, which Palestine is, must be able to arm itself otherwise the Israeli state can walk in any time and dictate the law.
Graham Leach, Frinton on Sea, UK
I don't know how Palestine can truly be an autonomous state without a standing army to defend its borders and people. I would like to see both nations recognise each other's right to exist; each other's right to live in peace and security; and yes, each other's right to defend itself with a standing army and control of its own airspace.
Karen Olsen, Seattle, WA USA
Why should the Palestinian state be demilitarised and the Jewish state not? Mainly I think we Arabs will not accept having to acknowledge the Jewish state at this time or any time.
Mahmoud Waly, Cairo, Egypt
The terms Netanyahu is insisting on cannot lead to peace, because Palestine will not have the independence that any other country would expect. Why should Israel have any say about whether or not Palestinians can have an army? Why should Jewish settlements be allowed to expand, while Palestinian refugees are not entitled to return to live on the land that was taken from them? Give the Palestinian people the freedom they are entitled to.
Yasmin Hossain, London, UK
I maybe a student of 16, but I am extremely interested in world affairs. By conducting his ridiculous policy speech, Benjamin Netanyahu has just destroyed any hopes for peace with Palestinians. They do not want to fall into this Israeli-trap of being deprived of their army since it will put their sovereignty in trouble while Israel would still be acting much like an occupying party. Netanyahu's speech was just a waste of time and an act to fool the Palestinian people.
Masharib Bashar, Karachi, Pakistan