The premier´s vision for ending the decades-old Middle East conflict, as presented in his long-anticipated speech on Sunday, marked a stark break from his Likud party´s ideology, which claims a historic right to the occupied West Bank.
Several key Likud MPs responded furiously to his unprecedented endorsement of a Palestinian state, albeit demilitarized and stripped of Jerusalem as a capital.
"The prime minister caved in to American pressure. He will have to explain to his coalition why he was ready to go so far," Likud MP Danny Danon told AFP.
"We oppose a Palestinian state and do not believe it will happen. If he moves from words to actions, he will encounter a wall of resistance."
Netanyahu´s speech followed massive pressure by US President Barack Obama´s administration to renew negotiations with the Palestinians in order to reach a peace agreement.
The premier, however, rejected in his speech a key US demand to freeze settlement construction in the occupied West Bank.
Likud MP Ayoob Kara said that Netanyahu´s concessions were "a pain killer to stop international pressure, but at this stage there will be no movement on the ground. It is wrong to go that way because there is no (Palestinian) partner."
National Infrastructure Minister Uzi Landau of the ultra-nationalist Yisrael Beitenu party, a key partner in Netanyahu´s coalition government, said that "accepting the principle of a Palestinian state was a grave mistake."
Yet even the most vocal critics on the right did not suggest seeking to topple Netanyahu´s right-leaning coalition at this stage.
A senior political analyst in Israel´s Maariv daily said that Netanyahu gave one of the most hardline speeches made by an Israeli premier in recent years to compensate for his ideological concession.
"The speech was thirty minutes of pure right-wing rhetoric to cover up one leftist phrase," Ben Caspit said.
Both the United States and the European Union welcomed Netanyahu´s speech as a positive step towards the renewal of peace talks, but the Palestinian Authority slammed it as sabotaging the teetering process.
The 59-year-old premier won strong backing from Defense Minister Ehud Barak who faces a mutiny within the ranks of his center-left Labor party for joining the Likud-led coalition.
"This is an important step in the right direction and I have to say that Prime Minister Netanyahu showed seriousness, responsibility and courage," Barak said in a statement.
Trade and Industry Minister Benjamin Ben-Eliezer, also of Labour, told AFP that Netanyahu "crossed the Rubicon and a psychological threshold... he turned his back on an ideology he backed for years and started seeing things in their true colors."
But opposition left-wing MPs slammed Netanyahu´s cautious peace overtures as not nearly enough.
"So much preparation for nothing. The prime minister proved again that he is the number one peace refusenik. Bibi chose to serve the needs of the settlers and the extreme--right rather than those of Israel," Meretz MP Ilan Gil-On said.
MP Ahmad Tibi of the United Arab List said that "the speech showed a mental fixation that wants a non-sovereign Palestinian state with ongoing settlement construction. I hope the White House will expose his public relations stunt."
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