"We will be generous about the size of the future Palestinian state, but as President Obama said, the border will be different than the one that existed on June 4, 1967," he said. "Israel will not return to the indefensible boundaries of 1967.

Netanyahu also called for Palestinian President Mahmoud Abbas to stand before his people and declare that he will accept a Jewish state, and to tear up his unity pact with the militant organization Hamas. He also said Israel must continue to have a military presence in the Jordan Valley, and that Jerusalem must never be divided.

A spokesman for the Palestinian president quickly responded to the Israeli leader's speech to Congress, saying Netanyahu had put more obstacles in the way of a Middle East peace agreement by imposing impossible conditions.

The two-decade old Israeli-Palestinian peace process has been at a standstill since September due to a dispute over Jewish settlement building on land captured in the 1967 war. Palestinians say peace must be based on the 1967 boundaries and they will not accept any Israeli military presence in their future state.