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The European Union warned Prime Minister-designate Benjamin Netanyahu on Friday that EU ties with Israel would suffer if he did not accept Palestinian calls for statehood.

Netanyahu this week said his future right-leaning Israeli government would negotiate peace with the Palestinians, but made no mention of a policy aim long backed by both the United States and Europe.

Asked how a failure to commit to the goal would affect EU-Israel ties, Czech Foreign Minister Karel Schwarzenberg, whose country currently holds the rotating presidency of the EU, said: "Relations would become very difficult indeed. At one of our next ministerial meetings we would have to discuss what consequences the EU would draw from that."

Speaking after EU talks, Schwarzenberg did not elaborate but Luxembourg's Jean Asselborn said a long-mooted upgrading of EU-Israeli trade and political ties depended on Israel achieving a peace deal with the Palestinians.

"We must tell the Israelis that it is not allowed to walk away from the peace process... The upgrading process was always to be viewed from the perspective of the peace process having been completed," Asselborn told reporters.

The EU already put talks on an upgrade of ties with Israel on hold in January after its offensive against Hamas in the Gaza Strip, in which Palestinian say some 1,300 inhabitants were killed. Thirteen Israelis were also killed in the hostilities. The campaign was a bid to halt cross-border rocket attacks by Gaza militants that have plagued southern Israel for years.

Netanyahu plans to present his new coalition government for parliamentary approval next week.

While he has shied away from backing the establishment of a Palestinian state in the West Bank and Gaza Strip, his Likud party agreed in a coalition deal with the Labor party to respect all of Israel's international agreements - a formula that includes accords envisaging Palestinian statehood.

"We Europeans are insisting that whatever the weighting is in the two governments [Israeli and Palestinian], the creation of a two-state solution must stand first and foremost," German Foreign Minister Frank-Walter Steinmeier said.

"We should not always have to start from the beginning again - that is my urgent appeal," he told reporters at talks with EU counterparts in the Czech Republic.