Lieberman also said that Israel agreed with the administration of Barack Obama, the US president on "many points" and that despite the settlement issue he remained hopeful that "even in this point we can formulate understandings, we can achieve understandings".

"It's not a main issue in our region," Lieberman said, adding: "If I try to compare what happens now in Iran and what happens in Afghanistan and in Pakistan to the problem of the settlements, it's very clear what ... must be the priority of the international community."

Later on Friday Lieberman also said Israel was "working hard" to reach an agreement with the US and referred to Netanyahu's speech earlier this month in which he gave some ground over the issue of a Palestinian state following US pressure.

'Understandings' claim

In depth


 Video: Al Jazeera profiles Israel's foreign minister
 Q&A: Jewish settlements
 
Analysis: Limiting a Palestinian state
 Riz Khan: The battle over Israeli settlements
 Riz Khan: The future of US-Israeli relations
 Inside Story: Roads and obstacles to peace
 Inside Story: US and Israel poles apart

Lieberman's comments followed talks with US officials this week including Hillary Clinton, the US secretary of state, in which he reiterated that Israel would not accept such a freeze, reiterating the country had "understandings" with the administration of George Bush, the former US president.

However his comments were rejected by Clinton following their meeting on Wednesday, who said there were no such records of any agreement and that she, Barack Obama, the US president and George Mitchell, the US envoy to the Middle East, wanted a halt to the settlements.

About 500,000 Jews live in more than 200 settlements and outposts set up across the occupied West Bank and East Jerusalem, territories which were captured from Jordan in 1967.

Last Sunday Benyamin Netanyahu, the Israeli prime minister, gave a key speech in which he gave some ground over the issue of a Palestinian state following US pressure.

Netanyahu, however, laid down several conditions, including that any such prospective state would have no military and that it recognised Israel as a Jewish state.

He also said that while Israel had no intention of building new settlements or of expropriating additional land for existing settlements there was a "need" to permit "natural growth" of settlements.

The speech was cautiously welcomed by the US, with Obama saying it was a "positive movement" that paved the way for "serious talks," although he reiterated the US demand for a halt to settlements.

However Netanyahu's speech was angrily rejected by the Palestinians, with Saeb Erekat, the chief Palestinian negotiator, telling Al Jazeera earlier this week that Netanyahu and Lieberman's comments were "about dictating and not negotiating".