President Donald Trump said Wednesday a peace agreement between Israel and the Palestinians might not include an independent Palestinian state.

Speaking at a press conference with Israeli Prime Minister Benjamin Netanyahu, Trump said he'd favor whatever agreement the two sides arrived at to through direct negotiations. 

"I’m looking at two states and one state,” Trump said. "I'm happy with the one they like the best."

Trump also urged Israel to "hold back" on building new Israeli settlements, and said Palestinians must stop teaching their youth to hate Israel.

WATCH: Trump to Netanyahu: 'Hold Back on Settlements for A Little Bit'

A senior White House official signaled the shift in U.S. policy regarding the Israel-Palestinian conflict while speaking to reporters Tuesday, saying peace between Israel and the Palestinians does not have to be through a two-state solution, and that it is up to the two parties to decide.

The official said the United States will not "dictate what the terms of peace will be."

"A two-state solution that doesn't bring peace is not a goal that anybody wants to achieve," the official said. "Peace is the goal, whether it comes in the form of a two-state solution if that's what the parties want or something else if that's what the parties want.  We're going to help them."

WATCH: Would Trump-Netanyahu Meeting Move Forward an Israeli-Palestinian Two-State Solution?

The official U.S. position has long been that Israel and the Palestinians should negotiate an agreement to divide into separate states, which would likely leave the Palestinians in control of Gaza, all or part of the West Bank and their envisioned capital in East Jerusalem.   The United Nations also backs the two-state path.

Palestinian position

Senior Palestinian official Saeb Erekat rejected any suggestion the two-state solution be abandoned, saying that replacing it means maintaining the status quo of "apartheid."

"The real alternative to a state of Palestine living side by side the state of Israel in peace and security on the 1967 lines is one democratic, secular state where Jews, Muslims and Christians can live equal with equal voice," Erekat said.

The last Israeli-Palestinian peace talks broke down nearly three years ago with no agreements.

The senior White House official said U.S. President Donald Trump is "hopeful to bring the two sides together to discuss peace," but the process will not be a high priority for the new administration.

The official also said Netanyahu's visit will "usher in a new relationship between Israel and the United States."

Former Secretary of State John Kerry made the peace process one of his key efforts when he served during the second term of President Barack Obama's administration, but overall U.S.-Israeli ties were strained.

Israeli Prime Minister Benjamin Netanyahu (R) and
FILE - Israeli Prime Minister Benjamin Netanyahu (R) and John Kerry brief the media before their meeting at Prime Minister's Office in Jerusalem, Nov. 24, 2015.

Talks to include Iran

Wednesday's talks are expected to include a focus on Iran, which in 2015 struck an agreement with a group of six world powers to limit its nuclear program to prevent the production of nuclear weapons in exchange for sanctions relief.  That deal is unpopular with both Netanyahu and Trump, who each have said is too favorable to Iran.

The White House official also said Trump's support for moving the U.S. Embassy from Tel Aviv to Jerusalem is up for discussion, as is Israel's settlement construction on land the Palestinians see as part of the future state.  The settlements have been condemned internationally.



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