He said that Israel never ratified the Annapolis deal, which required it to work with the Palestinians towards "the goal of two states".

The statement raised tensions between Israel and the EU, with the executive arm of the 27-member bloc warning that ties would not be improved until the new cabinet, under Benyamin Netanyahu, the prime minister, recognises the principle of a two-state solution.

EU warned

Netanyahu has insisted that other issues, such as the economy in the occupied West Bank, be addressed before discussion can take place on more substantive issues.

He is expected to present his cabinet's policy on the peace process to Barack Obama, the US president, in a meeting likely to be held in Washington on May 18.

"The programme will be based on Israel's security and on improving the economic situation of the Palestinians"

Yigal Palmor,
Israeli foreign ministry spokesman

"The programme will be based on Israel's security and on improving the economic situation of the Palestinians," Palmor said.

Israel last week warned the EU it should limit its criticism of the new cabinet or risk losing its role in the peace process, which has stalled since Israel's war on Gaza earlier this year.
 
An Israeli official said Rafi Barak, the deputy director of the Israeli foreign ministry's European desk, called the ambassadors of Britain, France and Germany to make the warning.
  
"Israel asks the European Union to keep a low profile and  conduct a quiet dialogue ... But if these declarations continue, Europe will not be able to have involvement in the peace process and both sides will lose," the official quoted Barak as telling the ambassadors.

However, Franco Frattini, Italy's foreign minister, on Sunday repeated the EU's demand that Israel must take "suitable positions" and declare its support for the peace process.

In an interview with Israel's Yediot Ahronot newspaper, Frattini also called on the blunt-speaking Lieberman to "lower the tone" of his declarations and to work toward an atmosphere of co-operation".