Israeli Prime Minister Benjamin Netanyahu said Sunday he was committed to the establishment of a Palestinian state, calling on the Palestinian leadership to return to negotiations unconditionally.

"I remain committed to the idea that the only way we can achieve a lasting peace is through the concept of two states for two peoples -- a demilitarised Palestinian state that recognises the Jewish nation state of Israel," he said.

Netanyahu spoke after talks with visiting German Foreign Minister Frank-Walter Steinmeier.

He said they had discussed "our common quest to move forward on peace with the Palestinians".

"I think the only way to move that is through direct negotiations. Unfortunately, the Palestinian Authority has moved away from these negotiations," Netanyahu said.

Netanyahu sparked international concern when he ruled out the establishment of a Palestinian state while campaigning for the March 17 general election but later backtracked on the comments.

Prospects for a renewal of the peace talks, which fell apart in April 2014, look bleak with the lack of trust between the sides exacerbated by the formation of Netanyahu's new hardline coalition.

"Tell the Palestinians to stop their campaign to delegitimise Israel. Tell them to get back to the negotiating table. Tell them that we should negotiate without preconditions," Netanyahu said to Steinmeier.

In a meeting in Ramallah with the top German diplomat, Palestinian premier Rami Hamdallah reiterated "the Palestinian leadership's commitment to the two-state solution based on 1967 borders," with east Jerusalem its capital.

Steinmeier will on Monday travel to the Gaza Strip, where large swathes of the coastal territory razed during the 2014 war with Israel have yet to be rebuilt.

Also on Sunday, Israeli cabinet secretary Avihai Mandelblit announced that Benny Begin, a member of Netanyahu's Likud party, had stepped down as minister.

Begin had been sworn in earlier this month as a minister without portfolio, but on Friday submitted his resignation to keep the number of ministers at 20, after Gilad Erdan, also of the Likud, belatedly joined the cabinet as internal security minister.