The prime minister’s speech was briefly disrupted by a heckler, who was quickly escorted out by security. Netanyahu said about the heckler, "I appreciate that protesting is allowed" adding "this is the real democracy."
Netanyahu rejected those that call Israel a "foreign occupier", saying that no one could deny the "4,000 year old bond between the Jewish people and the Jewish land."
"Why has peace eluded us?" the prime minister posed as he began to discuss the conflict between Israel and the Palestinians. "Because so far, the Palestinians have been unwilling to accept a Palestinian state if it meant accepting a Jewish state alongside it."
"I am willing to make painful compromises to achieve this historical peace. As the leader of Israel, it is my responsibility," he said.
"Now, this is not easy for me. It’s not easy, because I recognize that in a genuine peace we will be required to give up parts of the ancestral Jewish homeland," he said.
Reiterating a point he has made several times throughout his official trip to Washington, Netanyahu said that Israel "will not return to the indefensible borders of 1967."
"Israel will be generous on the size of a Palestinian state, but will be very firm on where we put the border with it," Netanyahu said.
He also called on Palestinians to see their future "homeland," rather than Israel, as the place to settle refugees.
"It’s time for President Abbas to stand before his people and say, ‘I will accept a Jewish state’," Netanyahu said to applause.
"Those six words will change history. They will make it clear to the Palestinians that this conflict will come to an end," he said. "And those six words will convince the people of Israel that they have a true partner for peace."
Netanyahu also urged Palestinian President Mahmoud Abbas to back out of a power-share deal signed this month with rival Palestinian Islamist group Hamas, which opposes peacemaking, and to shelve a campaign to secure statehood status for Palestine at September’s United Nations General Assembly.
"Tear up your pact with Hamas and sit down and negotiate, make peace with the Jewish state," he said.
"The Palestinian attempt to impose a settlement through the United Nations will not bring peace, it should be forcefully opposed by all those who want to see this conflict end," he said. "Peace cannot be imposed, it must be negotiated."
At the start of his speech, the prime minister congratulated the U.S. on getting Osama Bid Laden, adding "good riddance".
"I am dearly moved by this warm welcome," Netanyahu said, after being received in Congress by a long standing ovation. He received another standing ovation after mentioning that he saw many friends in the audience "both Democrats and Republicans."
As part of his visit to Washington the prime minister had earlier met with U.S. President Barak Obama, after which he reiterated his stance that Israel cannot go back to the "indefensible" borders of 1967.
The two leaders’ meeting came a day after the U.S. president’s Mideast policy speech called for negotiations for a two-state solution based on 1967 lines.
On Monday, Netanyahu spoke at the AIPAC policy conference where he spoke about Obama’s "ironclad commitment" to Israel’s security.
He also reiterated his rejection of Obama’s call for an Israeli-Palestinian peace based on 1967 lines.
Israel has historically enjoyed broad support from the U.S. Congress, a sign of which was seen at the AIPAC dinner when Senate Majority Leader Harry Reid challenged Obama’s on the border issue, saying "No one should set premature parameters about borders, about building or about anything else."
Palestinians have said that they will meet in Ramallah on Wednesday to determine what their next step will be, following Netanyahu’s visit to Washington.