"This idea of two states for two peoples is a stupid and childish solution to a very complex problem," senior members of Prime Minister Benjamin Netanyahu staff said on Wednesday as the entourage made its way back to Israel from Washington.

They were determined to emphasize that Israel would continue to build in the larger settlement blocs and Jerusalem despite US President Barack Obama's resolute opposition.

Senior aide Ron Dermer later clarified that "when I say 'childish' I mean the media's obsession with the two-state plan, the fixation with that idea rather than focusing on the fundamental issues. I don't think that two-states for two peoples is a childish approach."

However another top advisor had no qualms with explicitly deriding the solution itself as "juvenile."

The prime minister sounded largely contented as his plane touched town at Ben Gurion Airport this afternoon, and he told reporters that he felt the visit had yielded progress on a number of important points.

"There is an understanding between the United States and Israel on the Iranian issue, that the development of nuclear arms must be prevented," Netanyahu said. "President Obama has made clear that the diplomatic efforts will not be limitless, and there is an understanding that Israel retains the right to defend itself."

As for the Palestinian track, the prime minister said that it was "agreed that peace talks can begin immediately. But I stressed that any peace agreement would have to accommodate Israel's security needs. We also agreed on the need to involve other Arab nations in the peace process, including Syria. The Arab states must also make tangible gestures, not only Israel and the Palestinians."

The Prime Minister's Office will also be working to affect the details of Obama's new peace initiative, which he is expected to present during his visit to Egypt in June.

"Not two states for two peoples – but negotiations that eventually lead to a Palestinian state with limited authorities is a formula we'd be willing to accept," a senior aide said.

Jerusalem believes it crucial to coordinate with the US now rather than have to accept the terms decided on with the Arab states, without Israel's input.

Palestinian Authority officials have already said that they were told by the Americans that any initiative would include a Palestinian state with east Jerusalem as its capital.

'Construction in Jerusalem won't stop'

The prime minister may have told the Obama administration that his government is prepared to renew negotiations with the Palestinians without delay and without preconditions, but he so far has not gone into detail as to what his alternative to the two-state plan may be.

Dermer assured reporters that the outline to Netanyahu's stance exists, he just chose not to launch it in Washington. "The plan is in the prime minister's head. He certainly knows what his bottom line is, where he wants this to go," the senior staffer added.

It's best, he said, to maintain some ambiguity ahead of the negotiations.

But alongside these statements that Netanyahu is ready to sit down with Palestinian President Mahmoud Abbas tomorrow, the prime minister's office has so far refused to commit to freezing construction in the larger settlement blocs.

National Security Advisor Uzi Arad said in Washington that Israel will not agree to any advance stipulations before the negotiations begin. "If this is about give and take, then what is the Palestinian side ready to give? You can't expect Israel alone to answer the Palestinians' demands time and again," said Arad.

Another Netanyahu staffer said that building to allow for natural growth will continue in Jerusalem and the settlement blocs Israel will keep in any final agreement. "The demands to stop construction hinge on the Palestinians fulfilling their obligations," he said.