President Obama said Monday that he expected to know by the end of the year whether Iran was making “a good-faith effort to resolve differences” in talks aimed at ending its nuclear program, signaling to Israel as well as Iran that his willingness to engage in diplomacy over the issue has its limits.

“We’re not going to have talks forever,” Mr. Obama told Prime Minister Benjamin Netanyahu of Israel after a two-hour session in the Oval Office.

The president added that he did not intend to foreclose “a range of steps” if Iran did not cooperate.

Mr. Netanyahu, for his part, told Mr. Obama that he was ready to resume peace talks with the Palestinians immediately, but they would only succeed if the Palestinians recognized Israel as a Jewish state.

After their private meeting, the two leaders spoke to a small group of reporters and answered questions.

The meeting between the leaders, both new to their jobs but with very different political styles and outlooks, comes at a delicate time in the relationship between their countries, especially over the issue of Iran.

Mr. Obama wants time for his diplomatic overtures to work. Israel is rattled by those overtures and concerned that the president will not be as unwavering a supporter of Israel as was his predecessor, George W. Bush.

On Monday, Mr. Obama seemed to be trying to address that concern.

Speaking of the development and deployment of a nuclear weapon, he said, “We’re not going to create a situation in which talks become an excuse for inaction while Iran proceeds.”

Mr. Obama added that he intended to “gauge and do a reassessment by the end of the year” on whether the diplomatic approach was producing results.

The exchange was the first time Mr. Obama had seemed willing to set even a general timetable for progress in talks with Iran, a country that has not had diplomatic relations with the United States in three decades.

He said he expected international talks with Iran, involving six nations including the United States, to begin shortly after the Iranian elections in June, with the possibility of “direct talks” between the United States and Iran after that.

The meeting between Mr. Netanyahu and Mr. Obama was their first face-to-face session since each assumed office, and it went on far longer than the hour initially planned — so long, in fact, that the president rearranged his schedule for the rest of the day, postponing a meeting with a candidate to run NASA.

Mr. Netanyahu and Mr. Obama came to the meeting with competing goals: Mr. Obama wanted Mr. Netanyahu to embrace a two-state solution to the Israel-Palestinian conflict, and Mr. Netanyahu wanted Mr. Obama to take a strong stand on the threat to Israel’s security posed by Iran. Some independent experts said afterward that Mr. Netanyahu appeared to have succeeded.

“The logic of Netanyahu’s argument is, ‘What do you do if your power of diplomacy and toughened sanctions doesn’t work?’ ” said Aaron David Miller, a former Middle East negotiator in both Democratic and Republican administrations. “Anyone who was expecting a major rift in the U.S.-Israeli relationship is going to be disappointed.”

Still, some differences were apparent. The more hawkish Mr. Netanyahu thanked Mr. Obama for keeping “all options on the table” with respect to Iran. This is language that Mr. Obama rarely uses, but that was invoked frequently by Mr. Bush, typically to imply that the United States might use military force against Iran if its nuclear program progressed too far.

And Mr. Netanyahu did not explicitly embrace a two-state solution, as Mr. Obama had hoped. Rather, he said, “I want to make it clear that we don’t want to govern the Palestinians; we want to live in peace with them.”

Mr. Obama, meanwhile, pressed Mr. Netanyahu to freeze the construction of Israeli settlements on the West Bank.

“Settlements have to be stopped in order for us to move forward,” Mr. Obama said. “That’s a difficult issue. I recognize that. But it’s an important one, and it has to be addressed.”

The chief negotiator for the Palestinians, Saeb Erakat, said afterward that the Palestinians welcomed Mr. Obama’s remarks as a sign of “the active re-engagement of the United States” in the Middle East peace effort.

Mr. Erakat criticized Mr. Netanyahu for failing to endorse the two-state solution, saying he had “missed another opportunity to show himself to be a genuine partner for peace.”

In addition to meeting with Mr. Obama, Mr. Netanyahu was to have dinner with Secretary of State Hillary Rodham Clinton on Monday evening, an official at the Israeli Embassy said. He is also scheduled to meet with Defense Secretary Robert M. Gates as well as Congressional leaders on Tuesday.

In a sense, Monday’s meeting in the Oval Office was as much about the two leaders’ efforts to develop a relationship as it was about the substance of the issues between the nations.

Mr. Miller, the former Middle East negotiator, characterized the session as “President ‘Yes We Can’ sitting down with Prime Minister ‘No You Won’t.’ ”

Jon Alterman, director of the Middle East program at the Center for Strategic and International Studies in Washington, said it was impossible to discern what bonds, if any, the two men had forged.

“These are two political pros who are trying to assess whether they can work with the other, will have to work around the other, or will have to run over the other to get what they need,” Mr. Alterman said, “and each one is too good a politician to signal what his conclusion was.”