Ehud Barak, Israel's defence minister, has said that his country must recognise that the world will not put up with decades more of Israeli rule over the Palestinian people.
Speaking to Israel Radio on Israel's Memorial Day on Monday, Barak acknowledged that there was no way forward in negotiations with the Palestinians other than to meet their aspirations for a state of their own.
"The world is not willing to accept - and we will not change that in 2010 - the expectation that Israel will rule another people for decades more," he said.
"It is something that does not exist anywhere else in the world.
"There is no other way, whether you like it or not, than to let them [the Palestinians] rule themselves."
Peace talks between Israel and the Palestinians have been stalled since Israeli forces launched a 22-day offensive in the Gaza Strip in December 2008.
Barak heads the Labour Party, the most moderate member of the government of Binyamin Netanyahu, the Israeli prime minister, and it was not clear if his remarks were his personal opinion or reflecting a changing attitude within the government.
He said that Netanyahu's government had "done things that did not come naturally to it", such as adopting the vision of two states for two peoples and curtailing settlement construction.
"But we also should not delude ourselves. The growing alienation between us and the United States is not good for the state of Israel," he said.
Washington and its long-time ally have been at odds in recent months over Israel's continuing settlement construction in the West Bank and East Jerusalem.
Barack Obama, the US president, recently issued a pessimistic assessment of peacemaking prospects, saying that his country could not force its will on the Israelis and Palestinians if they were not interested in making compromises.
The Israeli defence minister said that the way to narrow the gap with the US was to embark on a diplomatic initiative "that does not shy from dealing with all the core issues" dividing Israelis and Palestinians.
Chief among these are the status of Jerusalem, final borders and a solution for Palestinian refugees from the 1948 Middle East war.
Meanwhile, in an interview Monday on ABC's "Good Morning America", Netanyahu south to minimise differences with the US and said he would not accept Palestinian demands that Israel stop building in predominantly-Arab East Jerusalem.
He said that the US and Israel "have some outstanding issues. We are trying to resolve them through diplomatic channels in the best way that we can".
Later on Monday, Netanyahu told the audience at the national cemetery that Israel is eager for peace, but is ready to confront its enemies.
"We extend one hand in peace to all our neighbours who wish for peace. Our other hand grasps the sword of David in order to defend our people against those who seek to kill us," he said.
Israel's Memorial Day, which is dedicated to the nearly 23,000 fallen soldiers and civilian victims of attacks, is observed with a two-minute nationwide siren when people stand at attention, traffic is halted and everyday activities come briefly to a standstill.
At sundown on Monday, the sombre Memorial Day will switch to Israel's 62nd Independence Day celebrations.