"We share President Obama's hope that the American effort heralds the beginning of a new era that will bring about an end to the conflict and lead to Arab recognition of Israel as the homeland of the Jewish people, living in peace and security in the Middle East," the statement said, noting that Israeli's security must also be guaranteed in any future peace moves.
Israelis had mixed reactions to Obama's speech, which was meant to heal rifts between the U.S. and the Muslim world.
One government official said the speech could have been worse for Israel, while a settler spokeswoman called Obama naive and out of touch with reality. Israel's dovish president, Nobel peace laureate Shimon Peres, said it was "full of vision."
Obama devoted significant time in his speech to the Israeli-Palestinian conflict. He asked Muslims to accept Israel's right to exist as a nation that came about after centuries of persecution and the Nazi genocide of 6 million Jews. He urged his audience to speak out against Holocaust denial, a common occurrence in the Arab world.
He also made an emotional plea for the right of Palestinians to live in dignity in an independent state of their own. He even used the term "Palestine," in a break from standard references to a future Palestinian state.
Palestinian President Mahmoud Abbas welcomed Obama's words. "It shows there is a new and different American policy toward the Palestinian issue," said his spokesman, Nabil Abu Rdeneh.
Israel, the country most on edge about Obama's outreach to Muslims, tried to put a positive face on Thursday's events.
Israel's hawkish government clearly did not want to exacerbate already palpable tensions with the liberal U.S. president.
"All in all, it's not bad. I don't think there's anything we disagree with here," said Danny Seaman, the director of Israel's Government Press Office.
"The state of Israel isn't against reconciliation," he added, but warned against any moves that could "be used by the extremists to endanger Israel and endanger the peace process."
Aliza Herbst, a 56-year-old resident of the West Bank settlement of Ofra, calmly watched Obama's speech on television and when he finished said "his naivety can be dangerous."
"You can have your speechwriters find every good thing a Muslim has ever done. But more modern history is that the Muslim world is at war with the Western world," she said, referring to the speech's myriad references to historical contributions by Muslims.
Michael Ben-Ari, an Israeli lawmaker from a far-right ultranationalist party, took the criticism of Obama a step further.
"His hatred for the people of Israel led him to deliver a most dangerous speech that exposed his pro-Islamic trends, designed to undermine the vision of the people of Israel returning to their homeland," he said.
Many Israelis had been anxious about Obama's speech, fearing the U.S. leader would use the stage to step up his recent criticism of Israel.
But Seaman, the Israeli official, said the speech had no major surprises and that the current disagreements between Israel and the U.S. are "well-known." Netanyahu has refused to endorse a Palestinian state and said settlement construction will continue.
Yuli Tamir, a dovish lawmaker from the centrist Labor Party, was filled with praise for Obama and his speech.
"It's one of the most important speeches ever delivered, a key speech for changing the climate in the Middle East. Israel will make a big mistake if it ignores it," she said.
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