Israel’s prime minister has laid out his terms for peace in the Middle East, giving the slightest of nods to the creation of a so-called Palestinian state, but with a host of conditions attached.

The Palestinian Authority rejected the conditions, including the demand that the Palestinians have no army or control of its air space, saying that Binyamin Netanyahu’s speech “sabotaged” peace efforts.

But Barack Obama, the US president, welcomed Netanyahu’s speech as an “important step forward”.