Intelligence and Strategic Affairs Minister Yuval Steinitz told the Daily Telegraph Friday that Israel is willing to make "considerable concessions" within the framework of an agreement with the Palestinians. Steinitz also said that a demilitarized Palestinian state is the only possible solution.

“At the end of the day, we will have such a situation. It’s going to be difficult to achieve it - there are many obstacles in the way - but I think there is no other solution to the problem,” Steinitz told the Telegraph.

Steinitz spoke to the paper just days before talks are scheduled to resume between Israelis and Palestinians. Israeli chief negotiator, Justice Minister Tzipi Livni, is slated to meet her Palestinian counterpart, Saeb Erekat, in Washington on Tuesday.

“We are prepared to make considerable concessions and it’s not going to be easy,” Steinitz told the Telegraph. “Both sides will have to make very significant concessions and very difficult concessions. We will probably have to make very serious territorial concessions. And the Palestinians will have to make also both territorial concessions - because there will be settlement blocs - but more important still they will have to recognize the very existence of the Jewish people and the Jewish state.”

Steinitz also said that Israel is ready for a two-state solution and said that any agreement will require a referendum, but added that as far as Jerusalem, the "status quo was the only option."

“We are ready for a two states for two people solution,” he told the Telgraph. “If we reach an end of conflict peace agreement with the Palestinians, we will have a referendum. I can tell you, I am confident that most Israelis will support it - even if we will have to make considerable and difficult concessions, including territorial concessions. But on one condition: that Israelis will be totally convinced that what we are getting in return is genuine, enduring peace and real security.”