Israeli PM Benjamin Netanyahu has said reaching agreement with Palestinians will be "difficult but possible", in his first comments about planned direct talks between the two sides.
But Mr Netanyahu insisted that the negotiations could only be successful if Israel's interests were protected.
He said Palestinians must accept Israel as the state of the Jewish people and its security must be guaranteed.
The direct talks, the first in 20 months, are to begin in September.
"Achieving a peace agreement between us and the Palestinian Authority is difficult, but possible," Mr Netanyahu told an Israeli cabinet meeting on Sunday.
"We are talking about a peace agreement between Israel and a demilitarised Palestinian state, and this state, if it is established at the end of the process... is meant to end the conflict and not to be a foundation for its continuation by other means."
"I know there is a lot of doubt after the 17 years which have passed since the start of the Oslo (peace) process," Mr Netanyahu added. "It's understandable why such scepticism exists."
Both Mr Netanyahu and Palestinian Authority President Mahmoud Abbas have been invited to Washington for the US-sponsored talks.
They have agreed to place a one-year time limit on the direct negotiations.
But correspondents say prospects of a comprehensive deal are slim, as serious disagreements exist on core issues - including the construction of Jewish settlements, the status of Jerusalem, the borders of a future Palestinian state and the right of return.
US President Barack Obama has also invited President Mubarak of Egypt and King Abdullah of Jordan to attend the Washington talks.
Mr Obama will hold meetings with the four leaders on 1 September.
Tony Blair, the special representative of the Middle East Quartet - which comprises the US, the UN, the EU and Russia - has also been invited.
A trilateral meeting at the state department between Mrs Clinton, Mr Abbas and Mr Netanyahu will formally relaunch the direct peace talks the following day.
The announcement that direct talks would resume, made by US Secretary of State Hillary Clinton on Friday, comes after months of shuttling by US special envoy George Mitchell between Mr Netanyahu and Mr Abbas.
Mr Abbas broke off talks with the previous Israeli Prime Minister, Ehud Olmert, in late 2008 and contacts were frozen following Israel's offensive against the militant Hamas movement in the Gaza Strip in December that year.
Indirect contacts resumed in May in the form of "proximity talks", overseen by Mr Mitchell.
But Mr Abbas resisted US overtures to resume direct talks, saying he wanted guarantees that a future Palestinian state would be based on the ceasefire lines that existed before the 1967 Middle East war, and that all settlement construction in the West Bank and East Jerusalem would stop immediately.
New armed forces chief
In a separate development on Sunday, the Israeli ministry of defence named Major General Yoav Galant as the new chief of staff for the country's armed forces.
As head of the Israeli army's Southern Command, Maj Gen Galant oversaw the Israeli offensive in Gaza in January 2009.
Maj Gen Galant's appointment is expected to be formally approved by the government next week.
He will succeed Lieutenant General Gabi Ashkenazi, who is stepping down early next year.