U.S. President Barack Obama said Thursday that the U.S. endorses the Palestinians' demand for their future state to be based on the borders that existed before the 1967 Middle East war.

"The borders of Israel and Palestine should be based on the 1967 lines with mutually agreed swaps, so that secure and recognized borders are established for both states," Obama stressed during a major Mideast policy speech at the State Department.

"The Palestinian people must have the right to govern themselves, and reach their potential, in a sovereign and contiguous state. "

Obama urged Palestinians and Israelis to renew peace talks, and stressed that the Palestinians' efforts to delegitimize Israel will fail.

"For the Palestinians, efforts to delegitimize Israel will end in failure. Symbolic actions to isolate Israel at the United Nations in September won’t create an independent state," Obama said.

"Palestinian leaders will not achieve peace or prosperity if Hamas insists on a path of terror and rejection. And Palestinians will never realize their independence by denying the right of Israel to exist."

The president stressed that the recent Fatah-Hamas reconciliation raises profound and legitimate questions for Israel.

"Israel must be able to defend itself – by itself – against any threat," said Obama, adding that provisions must be "robust enough to prevent a resurgence of terrorism; to stop the infiltration of weapons; and to provide effective border security."

"The full and phased withdrawal of Israeli military forces should be coordinated with the assumption of Palestinian security responsibility in a sovereign, non-militarized state."

Obama emphasized the United States' close friendship with Israel and restated its commitment to Israel's security, but urged Israel to make bold moves to advance peace.

"As for Israel, our friendship is rooted deeply in a shared history and shared values. Our commitment to Israel’s security is unshakeable. And we will stand against attempts to single it out for criticism in international forums. But precisely because of our friendship, it is important that we tell the truth: the status quo is unsustainable, and Israel too must act boldly to advance a lasting peace."

Obama also called for Syrian President Bashar Assad to lead his country to democracy or get out of the way, his most direct warning to the leader of a nation embroiled in violence.

In a wide-ranging speech on the Arab revolt across the Middle East and North Africa, Obama said the United States has a historic opportunity and the responsibility to support the rights of people clamoring for freedoms.

On Syria, Obama said the government has chosen the path of murder and the mass arrests of its citizens. He praised the Syrian people for their courage in standing up to repression in a bloody crackdown that has killed hundreds.

Obama also said that a top U.S. priority across the Middle East and North Africa is to promote reform and that it will oppose the use of violence and oppression against protesters.

"It will be the policy of the U.S. to support reform throughout the region," Obama said.

"We face a historic opportunity. We have a chance to show that America values the dignity of a street vendor in Tunisia more than the raw power of the dictator," he said.

Obama said the United States must speak to the broader aspirations of "ordinary people", for failure to do so will only feed the suspicion that the United States pursues its own interests at others' expense.

"We have a stake not just in the stability of nations, but in the self-determination of individuals," said Obama. "Societies held together by fear and repression may offer the illusion of stability for a time, but they're built upon fault lines that will eventually tear asunder."

"The United States opposes the use of violence and oppression against the people of the region," said the President, to which the audience reacted with a hearty applause.

Obama said the Arab revolution across the Middle East and North Africa speaks to a longing of freedom that has built up for years and has led to the overturning of tyrants - without perhaps more to fall. He embraced the call for change and compared it to signature moments of American history.

Obama stressed that the astonishing ripples across the region show that repression will not work anymore.