"Negotiations won't be easy but we're entering them honestly, sincerely," Netanyahu told ministers at the weekly cabinet meeting, the first since US Secretary of State John Kerry's announced the resumption of peace talks between the two sides after a three year deadlock.
Describing the resumption of the diplomatic process as a matter of "vital strategic interest", Netanyahu pledged to insist on Israel's security needs above all, saying his main guiding principles will be to maintain a Jewish majority in Israel and avoid a future Palestinian state in the West Bank becoming an Iranian-backed "terror state".
After a round of intense shuttle diplomacy, Kerry announced on Friday that Israel and the Palestinians had agreed on a basis for returning to the peace process, which broke down in 2008.
The two sides are to meet, likely in the coming week, to work out final details before actually resuming formal negotiations on the toughest issues of the Israeli-Palestinian conflict.
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Meanwhile, Israeli President Shimon Peres's office said today that he called Abbas yesterday, welcoming the Palestinian leader's decision to renew talks.
"You took a brave and historic decision to return to the negotiating table," Peres was quoted as telling Abbas. "Don't listen to the sceptics, you did the right thing."
"There is no alternative to peace. Netanyahu understands that this is a historic call. We want to see both peoples resolving this conflict," Peres told Abbas.
Palestinian president Mahmud Abbas has repeatedly stressed that his demands for a freeze to Israeli settlement building on occupied land and release of prisoners held by Israel must be met before talks can resume.
Israel has already announced release some Palestinian prisoners as a good will gesture, but there are few other official details to emerge about the framework of the talks.