Abbas' speech came shortly after he held talks with the president of the European parliament.
The Palestinian president, who also leads the Fatah party, met Hans Gert Pottering to discuss Palestinian reconciliation, the crisis in Gaza and the Middle East peace process.
Abbas' visit to Strasbourg is part of a European tour which will include visits to Britain, Italy, Turkey and Poland.
"It is no longer acceptable to negotiate on the principle on ending the occupation. Negotiations must end the occupation of all the land occupied in 1967," Abbas told the European parliament
"We cannot go back to negotiating on minor issues when the core issue is absent - and when 11,000 Palestinians remain imprisoned by Israel.
"What is needed is not just reconstruction in Gaza but also the reconstruction of the peace process."
Nour Odeh, Al Jazeera's correspondent in the West Bank, said that Abbas described the Israeli war on Gaza as part of a sustained policy of aggression.
"The Palestinian president said there was no difference between Israel's war on Gaza and what is going on the occupied West Bank, vis a vis Israeli actions," she said from Ramallah.
"He said there is no difference between Israeli settlement activity and the separation wall [between Israel and the Palestinian territories] and the almost 700 Israeli checkpoints that dissect the West Bank.
"Both are part of the same war on Palestinian aspirations, the president told the European parliament."
More than 1,300 Palestinians, at least a third of them women and children, were killed during Israel's 22-day war on Gaza. Thirteen Israelis died during the offensive.
Israel's stated aim for its military campaign was to prevent rocket attacks towards Israel by fighters loyal to Hamas, which has had de facto control of Gaza since routing Fatah forces in June 2006.
Palestinians and international aid organisations have said that the war on Gaza amounted to collective punishment of all Palestinians.
As Abbas spoke in Strasbourg, Salam Fayyad, the Palestinian prime minister, told the Palestinian Authority (PA) in Ramallah that Fatah and Hamas must reach common ground and work towards a national unity government.
"Israel has capitalised on this division [between Fatah and Hamas] to turn the West Bank, including Jerusalem, into a common ground for its [own] activities - to create isolated cantons in the West Bank and to keep the West Bank as separate entities," he said.
Fayyad also unveiled a package of PA measures to address Gaza's immediate reconstruction.
The authority has devised an emergency plan, worth $600m of mostly donated money, to repair and rebuild all damaged buildings.
Fayyad also proposed that $50m should be issued to the United Nations Relief and Works Agency in Gaza so that emergency aid can be provided.
More than $11m has been paid by the Palestinian Authority to fix the territory's electricity grid and provide generators, while $6m will go to repair water and sewage networks.
Dedicated support for Gaza's health and agricultural sectors should be a top priority, he said.
Fayyad also called for increased efforts on co-ordination with international relief agencies in order to keep up the flow of humanitarian aid to Gaza, and said that the PA will continue to pressure Israel to open Gaza's border crossings to allow aid in to the territory.