US President Barack Obama has called for direct talks between Israelis and Palestinians for lasting peace in the region and said that Jewish settlements were an obstacle to achieving that.
He was speaking in Ramallah after meeting Palestinian officials on the second day of his Mideast tour to emphasise the importance of reaching an Israeli-Palestinian peace deal.
Obama headed to the West Bank on Thursday to tell the Palestinians that the creation of a Palestinian state remains a priority for his administration.
Obama said Palestinians deserved an independent and sovereign state and an end to occupation by Israel. The president said that Palestinians should not have to confront the daily indignities that come with occupation.
Later on Thursday, Obama told students at the Jerusalem Convention Centre that "neither occupation nor expulsion is the answer".
The president did not bring a new plan to relaunch peace talks, but said both sides should end unilateral actions that halt moves to resolve the conflict, adding that negotiations, which he said were necessary, must lead to "two states for two peoples".
Those unilateral acts include continued construction of Jewish housing settlements on land claimed by the Palestinians and repeated Palestinian efforts to achieve recognition at the UN in the absence of a peace agreement.
"Israelis must recognize that continued settlement activity is counterproductive to the cause of peace, and that an independent Palestine must be viable - that real borders will have to be drawn," said the president, emphasising that Palestinians "have a right to be a free people in their own land" akin to "Israeli's who built a state in their [own] homeland".
"There can be no real [peace] process with the continuation of settlement activities on our lands "
- Yasser Abed-Rabbo, Abbas' aide
Yasser Abed-Rabbo, an aide of Abbas, said before the meeting that the Palestinians will tell Obama they won't return to negotiations with Israel without a settlement freeze.
"There can be no real [peace] process with the continuation of settlement activities on our lands,'' he said, adding that the issue of settlements is central to the Obama-Abbas meeting.
Palestinians argue that they cannot negotiate a border between Israel and a future Palestine while Israel unilaterally shapes that line through accelerated settlement building.
The Palestinians want a state in the West Bank, Gaza and East Jerusalem territories Israel captured in the 1967 war - but are ready for minor adjustments to accommodate some settlements closest to Israel.
Since 1967, Israel has built dozens of settlements in the West Bank and east Jerusalem that are now home to 560,000 Israelis - an increase of 60,000 since Obama became president four years ago.
Palestinians argue that only strong US pressure can get Israel to change course and halt its settlement drive, but doubt Obama is willing to do so.
Al Jazeera's Patty Culhane, reporting from Jerusalem, said that the president's speech sent assurances on every item on Israel's agenda, including Syria and Iran, but his rhetoric differed when talking about the peace process.
She said that in Obama's most detailed comment yet of people living in the occupied West Bank and Gaza, was "very detailed language from a sitting US president," and took a "very different tone from the one he said just a few hours earlier in Ramallah".
Culhane added that whenever Obama seemed to be taking a hard line on the Israeli government and prime minister in the past, Netanyahu was quick to speak out against those comments.
She also said that the symbolism of the events scheduled in Obama's visit, which includes paying tribute at historic tombs, could be hindered by Netanyahu's reaction to the presidents speech, and talking points.
In central Ramallah, several dozen people protested against what is perceived here as a strong US bias in favor of Israel.
Obama "should take immediate action to stop settlement activity because the passivity of his position toward settlements is happening while the very last option of a two-state solution is being killed by Israeli settlements,''
said Mustafa Barghouti, a leading Palestinian activist.
That calm has not extended to Gaza, which is run by the militant Islamic Hamas movement.
As Obama began his program Thursday, Israeli police said fighters in Gaza had fired two rockets at the southern town of Sderot.
One of the rockets exploded in the courtyard of a house in Sderot early in the morning, causing damage but no injuries, said police spokesman Micky Rosenfeld.
The other landed in an open field. Sirens wailed in Sderot shortly after the 7 am. rocket attack, forcing residents on their way to work or school to run to bomb shelters.
In contrast to Israel, the Palestinians have shown little excitement over the Obama visit. In the run-up to the visit, demonstrators have defaced and destroyed posters of Obama in an expression of dissatisfaction with US policy in the region.