Updated at 9:57 a.m. ET
RAMALLAH, West Bank President Obama urged Israelis and Palestinians on Thursday to get back to peace talks but offered no new ideas on how they might do so, essentially abandoning his previous support of the Palestinian demand for Israel to halt settlement activity before negotiations resume.
"The core issue right now is how do we get sovereignty for the Palestinian people and how do we ensure security for the Israeli people, and that's the essence of this negotiation," Mr. Obama said in response to a question about Israeli settlements from CBS News chief White House correspondent Major Garrett.
"That's not to say settlements are not important," Mr. Obama continued at a joint news conference with Palestinian President Mahmoud Abbas in Ramallah. "It is to say that if we solve those two problems, the settlement problem will be solved."
In remarks likely to disappoint, if not infuriate, the Palestinians, Mr. Obama said the United States continues to oppose the construction of Jewish housing on land claimed by the Palestinians but stressed that issues of disagreement between the two sides should not be used as an "excuse" to do nothing.
"If the expectation is that we can only have direct negotiations when everything is settled ahead of time, then there is no point for negotiations, so I think it is important to work through this process even if there are irritants on both sides," Mr. Obama told reporters.
"My argument is that even though both sides may have areas of strong disagreement, maybe engaging in activities that the other side considers to be a breach of good faith, we have to push through those things to try to get to an agreement," he said. "I think we can keep pushing through some of these problems and make sure that we don't use them as an excuse not to do anything."
Mr. Obama's comments echoed those of Israeli Prime Minister Benjamin Netanyahu, who has repeatedly called for the Palestinians to drop their preconditions for re-launching the stalled peace talks. The U.S. president's remarks are sure to reinforce deep skepticism among Palestinians about whether Mr. Obama is willing or able to use U.S. influence to press Israel into making concessions on a matter Palestinians have identified as a top priority.
Abbas and other Palestinian officials said they would not drop the demand, noting that much of the world considers the settlements to be outright illegal and not merely an impediment to peace talks.
"We require the Israeli government to stop settlements in order to discuss all our issues and their concerns," Abbas told the news conference, a marquee event during Mr. Obama's brief visit to the West Bank on the second day of his Mideast visit. "It's the duty of the Israeli government to stop the settlement activities to enable us to talk about the issues in the negotiations."
During his first four years in office, Mr. Obama had sided with the Palestinians on the issue. He and his surrogates repeatedly demanded that all settlement activity cease. However, when Israel reluctantly declared a 10-month moratorium on construction, the Palestinians balked at returning to the table until shortly before it expired and talks foundered shortly thereafter.
The Palestinians want a state in the West Bank, Gaza and east Jerusalem territories Israel captured in the 1967 war but are ready for minor adjustments to accommodate some settlements closest to Israel. Since 1967, Israel has built dozens of settlements in the West Bank and east Jerusalem that are now home to 560,000 Israelis an increase of 60,000 since Mr. Obama became president four years ago.
Mr. Obama said the U.S. remains opposed to settlements because "we do not consider continued settlement activity to be constructive, to be appropriate, to be something that can advance the cause of peace." Still, he added that internal Israeli politics "are complex and I recognize that is not an issue that's going to be solved immediately. It's not going to be solved overnight."
He did say that Palestinians deserve an independent and sovereign state and an end to occupation by Israel. He said the prospect of a contiguous Palestinian state alongside a Jewish state of Israel continues to exist if negotiations would restart.
"I absolutely believe that it is still possible, but I think it is very difficult," Mr. Obama said.
Even before Mr. Obama spoke with Abbas, several dozen Palestinians in downtown Ramallah protested against perceived strong U.S. bias in favor of Israel.
Mr. Obama "should take immediate action to stop settlement activity because the passivity of his position toward settlements is happening while the very last option of a two-state solution is being killed by Israeli settlements," said Mustafa Barghouti, a leading Palestinian activist.
A day earlier, Mr. Obama reaffirmed the unwavering U.S. commitment to Israel's security and noted there had been no fatal attacks on Israelis last year from the West Bank, which is controlled by Abbas.
That calm has not extended to Gaza, which is run by the militant Islamic Hamas movement, and Mr. Obama said it would be helpful if rockets weren't still being launched into Israel. As Mr. Obama began his program Thursday, Israeli police said militants in Gaza had fired two rockets at southern Israel, causing property damage but no injuries.
One of the rockets exploded in the courtyard of a house in the town of Sderot early in the morning, said police spokesman Micky Rosenfeld. The other landed in an open field. Sirens wailed in Sderot shortly after the 7 a.m. rocket attack, forcing residents on their way to work or school to run to bomb shelters.
Mr. Obama condemned the action during his news conference with Abbas. As a presidential candidate in 2008, Mr. Obama visited the border town, which is frequently targeted by rocket attacks from the nearby Gaza Strip. No group immediately claimed responsibility for the attack.
Over the past decade, Gaza militants have fired thousands of rockets and mortar shells at Israel, prompting Israel, with considerable U.S. assistance, to develop its Iron Dome missile defense system, which it credits with intercepting hundreds of rockets.
Immediately after his arrival in Tel Aviv on Wednesday, Mr. Obama and Israeli Prime Minister Benjamin Netanyahu toured an Iron Dome battery at Ben Gurion International Airport in a vivid display of U.S. security assistance to Israel.
In Jerusalem earlier Thursday, while examining the Dead Sea Scrolls and during a tour of a high tech exhibit, Mr. Obama and Netanyahu continued the easy banter that the two leaders displayed on Wednesday. As Netanyahu read a facsimile of a scroll, Mr. Obama marveled that the Hebrew language had not changed much over the centuries.