"But friends are going to disagree sometimes… There is a disagreement in terms of how we can move this peace process forward."
Last week Israel touched off one of the worst rows with the US in many years when it announced during a visit by Joe Biden, Obama's vice president, that it planned to build 1,600 more homes for Jews near East Jerusalem.
The announcement from the Israeli interior ministry was an embarrassment for Biden who had been dispatched to the region by Obama in an effort to restart talks between the Israelis and Palestinians.
"I specifically sent Vice President Biden to Israel to send a message of support and reassurance about my belief that Israel's security is sacrosanct and that we have a host of shared interests," Obama told Fox News.
The US president's first comments on the row came as his administration awaited a response from Binyamin Netanyahu, the Israeli prime minister, to Washington's sharp complaints over the episode.
Hillary Clinton, the US secretary of state, condemned the Israeli plans as "insulting" to peace efforts and reportedly called on Netanyahu to reverse the decision.
However, in Wednesday's interview Obama appeared to look to ease tensions, noting that the announcement on the new settler homes came from the Israeli interior ministry and that Netanyahu had apologised.
"The actions that were taken by the interior minister in Israel weren't helpful to [the peace] process. Prime Minister Netanyahu acknowledged as much and apologised for it"
"The actions that were taken by the interior minister in Israel weren't helpful to [the peace] process. Prime Minister Netanyahu acknowledged as much and apologised for it," he said.
"What we need right now is both sides to recognise that it is in their interests to move this peace process forward."
Israelis and Palestinians need to "take steps to make sure that we can rebuild trust", Obama said, adding that his administration had condemned recent clashes between Palestinian protesters and Israeli forces in East Jerusalem triggered by the settlement announcement.
Israel regards all of Jerusalem, including the mainly Arab eastern sector it occupied 43 years ago, as its capital.
Palestinians however, want East Jerusalem to be the capital of a future Palestinian state and the Palestinian leadership has said peace negotiations will not go ahead until the settlement construction is cancelled.
Obama's comments on the settlement row came as Clinton flew to Moscow for a meeting of the international Quartet on Middle East peace talks.
|Israel has shown little sign of backing down on the settlement construction [Reuters]
Officials said before her departure that she continued to await a response from Netanyahu to US complaints over the planned East Jerusalem settlements.
"We're still looking forward to a response. It hasn't happened yet. There hasn't been a call yet," Mark Toner, a State Department spokesman, told reporters.
On Tuesday another State Department spokesman, Philip Crowley, said he expected a conversation "very soon" between Clinton and Netanyahu.
In a previous call last week, Clinton told Netanyahu that Israel's announcement during Biden's visit sent a deeply negative signal to the US, just as Washington had persuaded Palestinians to join indirect "proximity" peace talks.
Israel's government meanwhile has shown little sign of backing down on the wider issue of Jewish settlements, even if it welcomed US assurances that its alliance with the US was safe following the row.
Avigdor Lieberman, Israel's foreign minister, international demands for a halt to building homes for Jewish settlers in East Jerusalem were "unreasonable".