(Reuters) - U.S. Vice President Joe Biden assured Israel Tuesday of Washington's commitment to its security and preventing Iran from producing nuclear weapons.

Barack Obama

He said the agreed resumption of Israeli-Palestinian talks through U.S. mediation was a "real opportunity" for peace.

In private meetings with U.S. officials, Israel has objected to dealing with core issues such as borders and the future of Jerusalem in the indirect talks, a key Palestinian demand. Israel has suggested the talks be held in Jerusalem and the West Bank city of Ramallah rather than in a venue like Washington.

Biden, who arrived Monday, is the highest-ranking member of President Barack Obama's administration to visit Israel, where political sources expect him to urge no strike on Iran while Washington pursues sanctions to curb its nuclear project.

"We're determined to prevent Iran from acquiring nuclear weapons and we're working with many countries around the world to convince Tehran to meet its international obligations and cease and desist," Biden said after meeting Prime Minister Benjamin Netanyahu.

"There is no space between the United States and Israel when it comes to Israel's security," Biden said as the two leaders made statements to the media.

Netanyahu voiced appreciation for what he described as Obama's efforts to lead the international community to place tough sanctions on Iran.

"The stronger those sanctions are, the more likely it will be that the Iranian regime will have to choose between advancing its nuclear program and advancing the future of its own permanence," Netanyahu said.

Israel, believed to be the Middle East's only nuclear power, has called for strong sanctions to cripple Iran's trade in oil and gas. Iran has denied it is seeking atomic weapons, saying it only wants nuclear power.

PEACE TALKS

Biden's visit coincided with Palestinian and Israeli agreement, in meetings with Obama's Middle East envoy George Mitchell this week, to resume peace talks suspended since December 2008, amid skepticism about their chances for success.

Mitchell is due back next week to try to set the structure and scope of "proximity talks" in which Israeli and Palestinian negotiators would meet separately with a U.S. mediator.

The Arab League and Palestine Liberation Organization have agreed to up to four months of indirect Israeli-Palestinian talks, giving President Mahmoud Abbas political backing to re-engage with Israel after he demanded it first freeze all settlement construction.

Israel instituted a limited building moratorium and, on Tuesday, announced plans for 1,600 new homes in an area of the occupied West Bank it annexed to East Jerusalem. Palestinians want East Jerusalem as capital of their own future state.

Abbas aide Nabil Abu Rdainah said the construction plan "will lead to obstructing negotiations" and called for U.S. intervention. There was no immediate response from Washington.

Speaking earlier about peace prospects, Biden said: "I think we are at a moment of real opportunity." Both Israel and the Palestinians would have to "make some historically bold commitments," he said.

Biden plans to see Abbas in the West Bank Wednesday.

Netanyahu, in pledging to work with Washington to reach a peace deal with the Palestinians, repeated a key Israeli condition that they recognize Israel as a Jewish state -- a demand they have rejected.

He said any peace accord must guarantee Israel's security "for generations to come."

(Additional reporting by Alastair Macdonald and Ari Rabinovitch in Jerusalem and Mohammed Assadi in Ramallah; Writing by Jeffrey Heller; Editing by Robin Pomeroy)

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