US President Barack Obama has urged visiting Israeli PM Benjamin Netanyahu to accept a Palestinian state.
After their first talks since both took office, Mr Obama restated his support for a two-state plan and said the US would be "engaged in the process".
He also said Israel had an obligation under the 2003 "roadmap" to stop Jewish settlement in the West Bank.
Mr Netanyahu said he was ready to start peace talks "immediately" but refrained from endorsing a Palestinian state.
After their meeting in Washington, Mr Obama said he had suggested the Israeli prime minister had a "historic opportunity to get a serious movement" on Palestinian statehood.
Mr Netanyahu said Israel was ready to live "side by side" with Palestinians and he could resume talks immediately, but any agreement depended on Palestinian acceptance of Israel's right to exist "as a Jewish state", he added.
Palestinian negotiator Saeb Erekat reacted with derision to Mr Netanyahu's remarks.
"How can I govern myself by myself as a Palestinian with his occupation going on on my neck on the hour every hour? With his roadblocks segregating our towns and villages and refugee camps?" he said.
A Hamas official, Musher al-Masri, said the Americans still were not treating Israel and the Palestinians even-handedly.
In Israel itself, right-wingers said they were worried the Americans were moving away from their commitment to Israel's security, while opposition Kadima politicians said Mr Netanyahu had missed the chance to forge real trust with President Obama.
Nuclear Iran
The BBC's Kim Ghattas in Washington says Mr Obama was clearly putting the onus on Mr Netanyahu to accept a Palestinian state.
The differences between the two men are still there, she says, adding that the meeting has given Mr Obama an opportunity to assess how big the gap is, and how he can move forward ahead of meetings with Egyptian and Palestinian leaders next week.
Our correspondent says Mr Netanyahu came to Washington with his own list of priorities, topped by Iran's nuclear programme.
"There's never been a time when Arabs and Israelis see a common threat the way we see it today," the Israeli prime minister said.
Mr Obama said "it is not in Iran's interest" to develop nuclear arms, and that the US would keep options open.
He stressed that "we should have some sense by the end of the year" on whether talks with Iran were bearing fruit.
Amid reports from Israel that the authorities were moving ahead with plans to expand a Jewish settlement in the occupied West Bank, Mr Obama said Israel had an obligation to stop Jewish settlement activity.
Tenders have been issued to build 20 housing units in Maskiot, a former Israeli military base that has been designated for housing settlers removed from Gaza in 2005.
Israeli campaign group Peace Now says this is a clear message to Washington that the Israeli government intends to expand settlements, which are considered illegal under international law.
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