A Palestinian state established within 1967 borders would leave too many Israelis beyond Israel's official borders, Netanyahu's top security advisor said on Sunday, adding that Israel was determined not to allow such a return.

The comments by National Security Council head Yaakov Amidror came after Netanyahu denied on Saturday that he was locked in crisis with the American president after their public dispute over the borders of a future Palestinian state.

"The reports of a disagreement have been blown way out of proportion," Netanyahu was quoted as saying by a spokesman.

At the White House on Friday, Netanyahu bluntly rejected Obama's vision for the borders of a Palestinian state in the West Bank and Gaza Strip, in what appeared to be the opening of a deep divide between the United States and Israel.

In an unusually sharp rebuke to Israel's closest ally, Netanyahu told Obama his endorsement of the Palestinian demand to go back to Israel's 1967 boundaries - meaning big land concessions - would leave Israel "indefensible."

Speaking to Israel Radio on Sunday, Amidror also responded to Obama's reference to the issue of possible land swaps between Israel, saying that "had the land swap issue been clearer and less ambiguous it is possible that some of the controversy would have been avoided."

The National Security Council also echoed Netanyahu's comments on the borders of a future Palestinian state, saying that "the State of Israel is determined not to return to 1967 borders," Amidror said, adding that "those are borders that place our ability to defend ourselves in question and it would be a mistake to return to them."

"They are borders that leave too many Israelis outside of Israel's borders and thus it wouldn't be right to return to those borders," Netanyahu's aide said.

Amidror also addressed the friendly nature of Netanyahu's dispute with the Obama administration, saying the premier indicated "he had come out more reassured from the conversation than when he entered it."

"Among other things, because of statements that were unclear in the president's speech and that were clarified in the conversation," Netanyahu's aide said.

"Israel and the United States do dispute the basic question of 'yes' or 'no' to 1967 borders, but I don’t think they disagree on other things, like the clear American statement that things need to be worked out through negotiations and not unilaterally or via coercion," he added.

Amidror also cited the American administration's rejection of "Hamas' participation in Mideast peace talks unless it accepts the Quartet's principles concerning negotiations, and even the clear definition of the talks' outlines, a Jewish state opposite a Palestinian state."

"Those things were clarified during the conversation but were also decisively said during the speech," Amidror said, adding that the newspaper "headlines did not match reality."

When asked what he felt the main bone of contention was between Netanyahu and Obama, Amidror said that, while there was disagreement over Obama's desire to postpone both Jerusalem and the Palestinian refugees to the end of negotiations, the establishment of a Palestinian state within 1967 borders was still the main point of disagreement.

Earlier Sunday, Netanyahu seemed to try to calm things down ahead of Sunday's address by Obama to the annual assembly in Washington of the pro-Israel lobby organization AIPAC, where the president could face a cool reception from some delegates.

"It's true we have some differences of opinion, but these are among friends," the spokesman quoted him as saying.

Netanyahu believed that Obama had "shown his commitment to Israel's security, both in word and in deed," the spokesman said. "And we are working with the administration to achieve common goals."

The spokesman did not define those shared goals, but Israeli officials have cited Obama's opposition to a Palestinian bid to win UN recognition of a state in the September in the absence of peace talks, and to Iran's nuclear program.