Netanyahu made the call during a major policy speech about his Middle-East peace making intentions.
He reversed his longstanding opposition to Palestinian statehood, a move seen as a concession to American pressure after President Barack Obama's address in Cairo on June 4.
The Israeli premier firmly rejected American demands for a complete freeze on Israeli settlements in the West Bank, the subject of a rare public dispute between Israel and its most important ally on an issue seen as critical to peace negotiations, the New York Times reported.
And Palestinians immediately rejected even his assent on Palestinian statehood, given the caveats, as a nonstarter.
In a half-hour speech broadcast live in Israel, Netanyahu laid out what he called his "vision of peace": "In this small land of ours, two peoples live freely, side-by-side, in amity and mutual respect.
Each will have its own flag, its own national anthem, its own government. Neither will threaten the security or survival of the other."
Netanyahu insisted on strong guarantees from the United States and the international community for Palestinian demilitarization and recognition of Israel's Jewish character, The NYT reported.
Netanyahu said that no new settlements would be created and no more land would be expropriated for expansion, but that "normal life" must be allowed to continue in the settlements, a term he has used to mean that limited building should be allowed to continue within existing settlements to accommodate "natural growth."
While this position did not diverge from Netanyahu's previous statements, he delivered it on Sunday in the context of a speech he had billed as a major foreign policy address, one he had personally urged Obama to watch. (ANI)