The United States still believes Israel's long-term security is best served by reaching an agreement to live alongside a recognized Palestinian state, President Barack Obama said Thursday.

Obama was speaking shortly after Israel's Prime Minister Benjamin Netanyahu formed a new right-wing ruling coalition seen as likely to further strain already damaged ties with the Palestinians.

"I continue to believe a two-state solution is absolutely vital for not only peace between Israelis and Palestinians, but for the long-term security of Israel as a democratic and Jewish state," Obama told a Camp David press conference.