Israeli Prime Minister's Office expressed hope on Thursday that US President Barack Obama's Cairo speech would help lead to reconciliation between Israel and the Muslim world.

"The government of Israel expresses hope that President Obama's important speech will lead to a new period of reconciliation between the Arab and Muslim world, and Israel," said the office in a statement.

"We share Obama's hope that the American effort heralds the opening of a new era that will bring about an end to the conflict and lead to a pan-Arab recognition of Israel as the nation of the Jewish people that lives in security and peace in the Middle East," added the statement.

Israel is committed to peace and will make every effort to expand the circle of peace while protecting its own interests, especially its national security, it noted.

However, the statement made no mention of Jewish settlements, which Obama said in his speech should not be expanded, nor Palestinian statehood.

At odds with Obama, Israeli Prime Minister Benjamin Netanyahu said earlier that construction would continue in existing settlements in the West Bank and he has not publicly endorsed a two-state solution to the Israeli-Palestinian conflict.

The statement came hours after Obama said in the eye-catching speech to the Muslim world that the United States seeks a new beginning of relations with Muslims based on mutual interests and respect.

Israeli President Shimon Peres praised Obama, saying that his speech "was a speech filled with a vision, a brave speech which promises hard work for all of the sides involved in advancing the peace process in the Middle East."

"The idea of peace was born in the Middle East and is a basic term used in the three monotheistic religions -- Christianity, Judaism and Islam -- and it is up to the children of Abraham to join hands in order to meet the challenge together: sustainable peace in the Middle East," said the Israeli president.

Meanwhile, politicians across Israel's political spectrum reacted with both praise and condemnation to Obama's words.

This is a direct, significant and brave appeal, in which Obama has formulated his vision and the important universal values he wishes to share with the Muslim world, Israeli Defense Minister Ehud Barak said in a statement from Washington.

"The speech contains reinforcement and encouragement for the moderate and peace-seeking elements, as well as an affront to terror and extremist elements threatening stability in our region and peace in the world," said Barak, adding that Israel lauded Obama's commitment to its existence and security, and his call for the country's integration in the Middle East.

"We hope the Arab world will heed Obama's call to put an end to terror and violence and establish peaceful ties with Israel. We will act in coordination with the US to promote peace, while emphasizing the safeguarding of Israel's essential security interests," said the defense minister.

However, other Israeli cabinet members had none of Barak's enthusiasm.

"Obama ignored the fact that the Palestinians have not abandoned terror," right-wing party Habayit Hayehudi (Jewish Home) Chairman Daniel Hershkowitz said during a tour of settlements south of West Bank city Hebron.

"The government of Israel is not America's lackey. The relations with the Americans are based on friendship and not submission, and therefore Israel must tell Obama that stopping natural growth in the settlements is a red line," said Hershkowitz.

Member of Knesset (parliament) Ze'ev Boim, from opposition party Kadima, used the opportunity to both laud the speech and criticize the Netanyahu government.

"Obama's speech is further proof that Netanyahu did not properly gauge the policies of the Untied States," he said. "The policies of the president on the Palestinian issue are identical to those of Kadima, and it is unfortunate that Netanyahu is unable to accept the idea of two states for two peoples for narrow political reasons."

(Xinhua News Agency June 5, 2009)