Palestinian and Israeli leaders met in Washington under the United States-brokered direct peace talks after 20 months hiatus, with Secretary of State Hillary Clinton pressing them to forget the long history of failed parleys and overcome "suspicion and skepticism".
"The decision to sit at this table was not easy... I want to thank all of you for joining us today to relaunch negotiations," Hillary, who is hosting the talks, told Palestinian Authority President Mahmud Abbas and Israeli Prime Minister Benjamin Netanyahu.
Praising the two leaders for their "courage and commitment", she said: "We understand the suspicion and skepticism that so many feel born out of years of conflict and frustrated hopes."
Hillary, US Special Envoy to Middle East George Mitchell and other US officials were to work with Netanyahu, Abbas and their teams during an intense three hours of negotiations.
"A true peace, a lasting peace will be achieved only with mutual and painful concessions from both sides," Netanyahu said, adding "We have to get from disagreement to agreement a big task."
Netanyahu told Palestinian President Abbas that just as "you expect us to recognise a Palestinian state as the nation state of the Palestinian people, we expect you to recognize Israel as the nation state of the Jewish people."
"Mutual recognition between us is indispensable to clarifying to our people that the conflict between us is over," he was quoted as saying by Haaretz newspaper.
Speaking in Arabic after Netanyahu, Abbas asked Israel to end fresh settlements in the West Bank on land that the Palestinians seek for a future state.
Abbas said that negotiations would face many hurdles, but that the goals were clear and the path to an enduring peace was known to both sides.
He echoed Israeli and American declarations that a final agreement could be achieved within one year.
"We call on the Israeli government to move forward with its commitment to end all settlement activities and completely lift the embargo over the Gaza Strip," Abbas said.
The talks came as Islamist Hamas rejected compromise with Israel, a day after militant group's gunmen killed four Israeli settlers outside the West Bank city of Hebron.
"Today marks the start of direct negotiations between someone who has no right to represent the Palestinian people and the brutal occupier, to provide a cover for Judaizing Jerusalem and stealing the land," top Hamas leader in Gaza Mahmoud Zahar told media.
US President Barrack Obama warned Hamas of senseless killings to derail the Middle East peace process, saying "the message should go out to Hamas and everybody else who is taking credit for these heinous crimes that this is not going to stop us from not only ensuring a secure Israel but also securing a longer-lasting peace in which people throughout the region can take a different course."
Direct Israeli-Palestinian peace talks broke off nearly two years ago in December 2008 at the start of Gaza war.