Israeli PM talks two-state principle

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Israeli Prime Minister Benjamin Netanyahu has used the phrase "two states for two peoples" to describe the peace process with the Palestinians.

Netanyahu said at a cabinet meeting on Sunday that the Israelis agreed that a two-state solution was the right approach to reaching a peace deal with the Palestinians, but only with certain conditions.

Netanyahu said, "We have brought a national agreement on the phrase 'two states for two people', the terms of agreement will be based on the fact that the Palestinians will have to recognize the state of Israel as the Jewish state, and it also means that the problem of refugees will be solved outside the borders of Israel, and that Israel needs and will receive defensible borders, and will include also a full demilitarization of the Palestinian territory."