US PRESIDENT Barack Obama has pressed Israeli Prime Minister Benjamin Netanyahu to make the "tough decisions" needed to move forward on talks with the Palestinians, as he sought to salvage an elusive Middle East peace plan.

However, facing a US-imposed deadline next month, the Israeli leader declared: "Israel has been doing its part and the Palestinians have not."

Mr Netanyahu's comments underscored the slim prospects of reaching an agreement in the long-running conflict, despite a robust effort by US Secretary of State John Kerry.

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Mr Obama's meeting with Mr Netanyahu's in the Oval Office marked a more direct foray into the negotiations by Mr Obama, who will also meet at the White House later this month with Palestinian Authority President Mahmoud Abbas.

The President said: "It is still possible to create two states, a Jewish state of Israel and a state of Palestine, with people living side by side in peace and security, But it's difficult. It requires compromise on all sides."

While the relationship between Mr Obama and Mr Netanyahu has improved, the two still wrestle with deep differences, such as Iran.

Israel sees Iran's nuclear programme as a threat and fears Tehran is using US-led negotiations to stall while it builds a bomb.