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The Palestinians' refusal to recognize Israel as a Jewish state should be "one of the central topics on the negotiating table," Foreign Minister Avigdor Lieberman said on Sunday, causing an uproar among Knesset members outraged by his suggestion that Israeli citizens who fail to demonstrate loyalty to the state should be transferred to Palestinian territory.

"This is a subject that we've run away from until now, but we can't go on like this. It's as if someone were selling you an apartment on the condition that his mother-in-law continue living there," Lieberman said ahead of Sunday's cabinet meeting. "Every Israeli citizen who accepts his or her citizenship with pride can serve in any position, but people like Hanin Zuabi need to be Palestinian citizens. They can go run for election in Gaza under Hamas."

Zuabi is a Balad party lawmaker who participated in the Turkish aid flotilla to Gaza in May.

Zuabi said in response, "We represent the only possible democratic option, while Lieberman represents apartheid and ethnic cleansing." The foreign minister's remarks "are based on a racist creed, while ours rests on the principle of full equality for citizens. We both agree, however, that the question of the Palestinians in Israel and all matters regarding the definition of the state are related to the talks between Israelis and Palestinians."

Hadash chairman Mohammed Barakeh said, "We never sold the apartment. We stayed in the apartment, which he has taken over. We are asking to live in dignity and equality in our own home."

Ahmed Tibi, chairman of the United Arab List-Ta'al, said, "It is grave when the deputy prime minister is a settler who constantly talks about deporting citizens or collectively appropriating citizenship. We were here before Lieberman the fascist immigrant, and we'll be here after him.

"We're not talking about banishing citizens from the State of Israel, but if we are, then let's have those who arrived last leave first. The first stumbling block to a final-status agreement and equal rights is the settlers, not indigenous Arab citizens," Tibi said.

Minority Affairs Minister Avishay Braverman said, "Lieberman's racist remarks harm the sensitive social fabric between Jews and Arabs, and only cause damage to the State of Israel."