At the first meeting of Israel’s 34th government on Friday morning, Prime Minister Benjamin Netanyahu said that Israel would pursue a diplomatic “settlement” with the Palestinians while working with regional states to attain that goal.

“We will continue to promote a diplomatic settlement while upholding the vital interests and security of the citizens of Israel. At the same time and perhaps in assistance, we will try to realize the opportunity of regional developments and new possibilities of action with the moderate and responsible countries around us,” Netanyahu told his new cabinet.

Like the coalition agreement published this week, Netanyahu’s statement made no mention of a two-state solution — the concept of a sovereign Palestinian state alongside Israel which is favored by the US, EU, United Nations and Arab League and which Netanyahu has sometimes said he endorses in principle.

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Soon after its narrow approval by parliament late Thursday, the new Orthodox and right-wing government was warned by Washington that it must forge a deal with the Palestinians for its own good.

US President Barack Obama pointedly mentioned this imperative in remarks shortly after the Knesset ratified Netanyahu’s government by 61 votes to 59.

“I continue to believe a two-state solution is absolutely vital for not only peace between Israelis and Palestinians, but for the long-term security of Israel as a democratic and Jewish state,” said Obama.

“I know that a government has been formed that contains some folks who don’t necessarily believe in that premise, but that continues to be my premise.”

Netanyahu raised the ire of the Obama administration two months ago during the election campaign when he indicated that a Palestinian state would not be created while he was prime minister.

In an interview with Hebrew news website NRG a day before the election, Netanyahu said he would not preside over the establishment of such a state. The US condemned the comments.

Two days after the elections, Netanyahu said he backed a “sustainable, peaceful two-state solution” but that the disunity of Palestinian politics and security threats across the region meant that conditions were not ripe.

Other countries are also pushing for a diplomatic initiative. European diplomats say that over the summer France is expected to renew its efforts to get a UN Security Council resolution on ending the conflict.

Israel insists the only path to a solution is through direct, bilateral talks with the Palestinians, and has bristled at UN involvement to set a timeframe for a deal. The US has hitherto supported the Israeli position, but the Obama administration now says it is re-evaluating its approach.