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The US leader made the remarks a day after holding inconclusive talks in New York with Israeli Prime Minister Benjamin Netanyahu and Palestinian leader Mahmud Abbas.
Saeb Erakat, chief Palestinian negotiator, welcomed Obama's comments.
"We are encouraged and highly appreciate President Obama's statements on settlements being illegal and calling to an end of the occupation that started in 1967," he told AFP.
Netanyahu did not react to Obama's comments on settlements.
""I commend this important speech of Obama and his call to renew the peace process without preconditions," the Israeli premier however said. "I commend his unequivocal support of Israel as the nation state of the Jewish people.
"This rapprochement between the US and Israeli viewpoints is the result of many contacts we have had, and of course the expression of good will by both sides," he added.
The Obama administration has demanded a complete freeze to Jewish settlements in the West Bank and east Jerusalem, land the Palestinians want to turn into a future state. But Israel has so far balked.
Tuesday, Abbas also made clear that Israel must halt settlement construction.
"We insisted on the need for Israel to respect its commitments, notably an end to settlement construction in all its forms, including natural growth," Abbas told Palestinian journalists.
Obama meanwhile told the Israeli and Palestinian leaders Tuesday to stop stalling and open talks on a comprehensive deal to end an "endless cycle" of conflict and suffering.
Final status issues include the fate of Jewish settlements in the West Bank, the borders of an eventual Palestinian state, the status of Jerusalem and the right of return of Palestinian refugees.
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Saeb Erakat, chief Palestinian negotiator, welcomed Obama's comments.
"We are encouraged and highly appreciate President Obama's statements on settlements being illegal and calling to an end of the occupation that started in 1967," he told AFP.
Netanyahu did not react to Obama's comments on settlements.
""I commend this important speech of Obama and his call to renew the peace process without preconditions," the Israeli premier however said. "I commend his unequivocal support of Israel as the nation state of the Jewish people.
"This rapprochement between the US and Israeli viewpoints is the result of many contacts we have had, and of course the expression of good will by both sides," he added.
The Obama administration has demanded a complete freeze to Jewish settlements in the West Bank and east Jerusalem, land the Palestinians want to turn into a future state. But Israel has so far balked.
Tuesday, Abbas also made clear that Israel must halt settlement construction.
"We insisted on the need for Israel to respect its commitments, notably an end to settlement construction in all its forms, including natural growth," Abbas told Palestinian journalists.
Obama meanwhile told the Israeli and Palestinian leaders Tuesday to stop stalling and open talks on a comprehensive deal to end an "endless cycle" of conflict and suffering.
Final status issues include the fate of Jewish settlements in the West Bank, the borders of an eventual Palestinian state, the status of Jerusalem and the right of return of Palestinian refugees.
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