Two-state solution 'vital' for Israel's security: Obama

US President Barack Obama has reiterated that a two-state solution for Israel and Palestine is "absolutely vital" for Israel's security, Efe news agency reported on Friday.

"I continue to believe a two-state solution is absolutely vital for not only peace between Israelis and Palestinians, but for the long-term security of Israel as a democratic and Jewish state," Obama told reporters at the President's country retreat at Camp David on Thursday after a summit with leaders from six Persian Gulf countries.

However, Obama declined to comment on the agreement announced this week between the Vatican and Palestine that supports the "two-state" solution and includes Vatican recognition of an independent Palestine.

"That prospect (of a peace treaty between Israel and Palestine) seems distant now, but I think it's always important for us to keep in mind what's right and what's possible," added Obama.

He admitted that certain members of the recently formed government of Israeli Prime Minister Benjamin Netanyahu did not support the premise of a two-state solution, but confirmed that it continued to be his premise.

Relations between the US and Israel have deteriorated in recent months.In March, Obama announced that the US would re-consider backing a UN Security Council resolution to recognise a sovereign Palestinian state, following decades of vetoing similar proposed resolutions.

The US's decision to review its position in the UN followed Netanyahu's announcement that there would never be a Palestinian state as long as he continued to head the government, a declaration he retracted two days later.