Lieberman's comments come as Israel and the Palestinians try to solve the deadlock over Jewish settlements [GETTY]

Israel's foreign minister has said that a future peace deal with the Palestinians should centre around redrawing his country's borders, proposing to exclude some of the country's 1.3 million Arab citizens.

Avigdor Lieberman told reporters on Sunday that Israel's future borders should incorporate Jewish settlements, while placing Arab villages in Israel on the Palestinian side.

"Our guiding principle in negotiations with the Palestinians must not be 'land for peace' but an exchange of territories and populations," he said.

His comments come as Israel and the Palestinians began long-awaited peace negotiations earlier this month, which may collapse if the two sides fail to resolve a bitter dispute over Israeli settlements.

The Palestinians have warned that they will walk out of talks if a moratorium on settlement construction, which is set to expire at the end of the month, is not extended. But Benyamin Netanyahu, Israel's prime minister, had suggested that some building curbs will be lifted.

Influencing policy

Al Jazeera's Nour Odeh has said that Lieberman's comments are "very important."

"He's not just another 'rightwing' politician, he's Netanyahu's main coalition partner.

"This has been Lieberman's position all along but that was not newsworthy when he was just a fringe politician. Now, he influences government policy."

"Land for peace," the foundation on which years of peace talks with the Palestinians have been based, refers to the concept of Israel withdrawing from Palestinian territories it occupied in the 1967 war in return for an end to the conflict.

Lieberman, however, says that trading land for peace "is as if someone sells you a flat and then demands that his mother-in-law continues living there."

"The vigorous refusal of the Arab League and the Palestinian Authority to recognise Israel as the state of the Jewish people obliges us to make the question of the Israeli Arabs one of the main issues on the negotiating table."

Lieberman, himself a resident of a West Bank settlement, has in the past campaigned for Israel's Arab citizens to be stripped of their citizenship unless they take an oath of allegiance to the Jewish state.

Netherlands ban

Meanwhile, as part of a widening circle of sanctions against Israel over its settlement policy, the Dutch government has barred five West Bank settlement mayors from entering the Netherlands on Sunday.

The officials were part of a delegation of 40 Israeli mayors who had planned professional study trip to the Netherlands.

In response to the Dutch authorities' decision, all Israeli mayors cancelled their trip.

Linda Sasson, the spokesperson for the Union of Local Authorities in Israel, said this program has taken place in various countries in the past, but this was the first time settler mayors have been barred.

The Netherlands is a member of the European Union, which has repeatedly criticised Israel's settlement plans.

Catherine Ashton, the EU foreign policy chief, had earlier said: "The EU position on settlements is clear. Settlements are illegal, constitute an obstacle to peace and threaten to make a two state-solution impossible."

More than 500,000 Jews live in West Bank settlements deemed illegal by international law.