JERUSALEM (Reuters) - Washington’s visiting Middle East envoy vowed on Thursday to vigorously pursue the creation of a Palestinian state, setting the stage for possible conflict with Israel’s new right-leaning government.

Israel's Prime Minister Benjamin Netanyahu (R) meets U.S. President Barack Obama's Middle East envoy George Mitchell in Tel Aviv April 16, 2009 in this picture released by the U.S. Embassy. Netanyahu told Mitchell on Thursday that his government would condition talks over Palestinian statehood on the Palestinians first recognising Israel as a Jewish state. REUTERS/Matty Stern/U.S. Embassy/Handout

Prime Minister Benjamin Netanyahu has so far refused to commit Israel to restarting statehood talks and told President Barack Obama’s envoy George Mitchell his government wanted the Palestinians to first recognize Israel as a Jewish state.

“Israel expects the Palestinians to first recognize Israel as a Jewish state before talking about two states for two peoples,” a senior official in Netanyahu’s office quoted the prime minister as telling Mitchell at a meeting in Tel Aviv.

Another Israeli official said Netanyahu saw Palestinian acceptance of Israel as a Jewish state as “a crucial element in moving forward with the political dialogue.”

Senior Palestinian negotiator Saeb Erekat dismissed Netanyahu’s demands as part of an effort by the two-week-old government to dodge commitments made by its predecessor to negotiate thorny issues such as borders, the future of Jerusalem and Palestinian refugees.

Palestinians have long rejected such explicit recognition of the Jewish nature of a state where one in five people is Arab.

In back-to-back meetings with Israeli leaders, Mitchell stressed Obama’s commitment to the goal of a two-state solution, “in which a Palestinian state is living in peace alongside the Jewish state of Israel,” to end the decades-old conflict.

“That is our objective. That is what we will pursue vigorously in the coming months,” Mitchell said.

Netanyahu has been vague about any future peacemaking with the Palestinians, but ultranationalist Foreign Minister Avigdor Lieberman, who met Mitchell earlier in the day, has described negotiations launched at a 2007 conference in Annapolis, Maryland as at a “dead end.”

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Netanyahu’s call for the Palestinians to recognize Israel as a Jewish state threw yet another hurdle in the way of U.S. efforts to revive Israeli-Palestinian peacemaking.

Mitchell, a former U.S. senator who mediated in the Northern Ireland peace process, planned to hold talks on Friday with Western-backed Palestinian President Mahmoud Abbas.

LIEBERMAN, WILD CARD

At a brief public appearance alongside Mitchell, Lieberman made no mention of a Palestinian state, saying only that his meeting with the U.S. envoy was “a great opportunity to exchange some ideas, and we spoke about really close cooperation.”

Mitchell said that Lieberman told him about Israel’s desire to “make economic improvements” in the West Bank.

Palestinian leaders have rejected any notion of an “economic peace” and have said U.S.-backed talks with Israel cannot resume until Netanyahu makes a commitment to statehood.

Lieberman has stirred controversy in the Arab world with his hawkish rhetoric and Egypt said this week it would not deal with the Israeli foreign minister as long as his positions remained unchanged.

But Lieberman’s deputy Danny Ayalon told Israel’s Channel Two television on Thursday: “I promise you that not only will there be a visitby minister Lieberman in Egypt, but he will also host senior Egyptians here, and soon.”

In addition to pressing Netanyahu to accept a two-state solution, the Obama administration has urged the government to ease its blockade of the Hamas-ruled Gaza Strip.

For the first time in over a month, Israel launched an air strike in the Palestinian enclave on Thursday, blowing up what it said was a booby-trapped building near the border fence.

Local residents said no one was hurt in the blast.