Israel PM Benjamin Netanyahu said he would agree to peace with Palestinians.
The area under Palestinian control would have no army, would not control its airspace, and would not be allowed to bring in arms, Netanyahu said.
Netanyahu, who recently returned to the prime ministerial post he held 10 years ago, has previously not endorsed a two-state solution.
In his address, Netanyahu discussed the pain and loss through bloodshed on both sides of the conflict.
He said the root of the conflict lies in the refusal by the Palestinians to accept that the Jewish people have a homeland in Israel.
Netanyahu also called on Palestinian leaders to take immediate steps toward peace talks.
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