Obama says 1967 'basis' for Israel-Palestinian peace

US President Barack Obama has said that the "1967 border" must be the "basis for negotiations" to set up a future Palestinian state.

In an interview with the BBC, Mr Obama said the position was "obvious" to those who had followed the history of the Israeli-Palestinian conflict.

Israeli PM Benjamin Netanyahu said the lines, from before the 1967 Middle East conflict, were "indefensible".

Israel has built extensive Jewish settlements across the area.

Mr Obama was speaking hours after delivering a major speech on Middle East policy at the US state department.

"The basis for negotiations will involve looking at that 1967 border, recognising that conditions on the ground have changed and there are going to need to be swaps to accommodate the interests of both sides," Mr Obama told the BBC's Andrew Marr in an interview to be broadcast in full on Sunday.

The US president said Israel would not "move forward" in negotiations unless the country felt secure against attacks from Gaza and Hezbollah in Lebanon.

And he acknowledged that the future status of Jerusalem and the fate of Palestinian refugees would remain to be discussed.

"Our argument is let's get started on a conversation about territory and about security," he said.

"If we make progress on what two states would look like and a reality sets in among the parties, that this is how it is going to end up, then it becomes easier for both sides to make difficult concessions to resolve those two other issues."

Israel immediately rejected Mr Obama's vision of a Palestinian state based on the borders before the 1967 Six Day war between Israel and a bloc of neighbouring Arab states.

In a statement, Mr Netanyahu, who is due to hold talks with Mr Obama in Washington on Friday, said the 1967 lines would leave Jewish settlements outside Israel.

An estimated 300,000 Israeli settlers live in the West Bank, which lies outside Israel's 1967 boundaries.

Mr Netanyahu said he expected to hear a reaffirmation from Mr Obama of US commitments "made to Israel in 2004", a reference to a letter from former US President George W Bush suggesting Israel may keep large settlements as part of any peace deal.

"Those commitments relate to Israel not having to withdraw to the 1967 lines," Mr Netanyahu added.

Update May 29 2012: Small changes have been made to the headline and introduction of this report after an appeal to the BBC Trust was partially upheld.