Speaking at the opening of the weekly cabinet meeting, Netanyahu -- who in 2009 declared his support of a two-state solution -- said he and US Secretary of State John Kerry will "try to make progress to find the opening for negotiations with the Palestinians, with the goal of reaching an agreement".
"This agreement will be based on a demilitarised Palestinian state that recognises the Jewish state, and on firm security arrangements based on the IDF (Israeli military)," he said.
"There was never a government discussion, resolution or vote about the two-state solution," Danon said in an interview with The Times of Israel news website on Thursday.
If it were put to a vote, "the majority of Likud ministers, along with Jewish Home will be against it," he said, referring to a far-right nationalist faction within the government.
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"Today, we are not fighting it, but if there will be a move to promote a two-state solution, you will see forces blocking it within the party and the government," he said.
Although Netanyahu made no direct mention of Danon's remarks, which made headlines in the press today, he stressed the need for unity within his cabinet.
"In order to face these challenges and many others, the government has to function as one unit," he said.
The Palestinians expressed little surprise at Danon's remarks.
"What the Israeli government is doing affirms these statements, and that it is trying to do whatever it can to prevent us from reaching an independent Palestinian state," senior Palestinian official Yasser Abed Rabbo told Voice of Palestine radio.