Occupied Jerusalem: Israeli Defence Minister Ehud Barak voiced concern on Monday over a deep rift with the US over colony-building policy and said Israel should do more to try to achieve peace with the Palestinians.

"The alienation that is developing with the US is not good for Israel," said Barak, head of the centre-left Labour Party in right-wing Prime Minister Benjamin Netanyahu's governing coalition.

In an interview with Israel Radio on the country's annual memorial day for its soldiers, Barak called for a "far-reaching Israeli diplomatic initiative" on peace, including talks with the Palestinians on core issues of the Middle East conflict.

"We have strong ties with the US, a bond, long-term friendship and strategic partnership. We receive $3 billion from them each year, we get the best planes in the world from them," he said.

Change

"For all these reasons we must act to change things," Barak said, while voicing doubts Netanyahu would soon enjoy the same warm ties with the White House as his predecessors did when former US president George W. Bush was in office.

In separate remarks at a memorial ceremony, Netanyahu spoke in broad terms of Israel's approach to peacemaking.

"One of our hands is stretched out in peace to all our neighbours who desire peace. The other hand grasps the sword of David to defend our people against those who wish us dead," Netanyahu said, invoking the Biblical warrior king of Israel.

With Netanyahu and US President Barack Obama sharply at odds over colony-building policy in occupied areas Palestinians want for a state, Barak held out the prospect of reshaping Israel's government so that it could make bold land-for-peace moves.

He gave no specifics but political commentators have raised the possibility of bringing in former Foreign Minister Tzipi Livni's centrist Kadima party to keep Netanyahu's coalition in power if pro-colony factions decide to pull out.

"With a broad readiness to go for a [peace] agreement, Israeli governments have overcome many obstacles in the daily discourse with the Americans about building in this or that colony or a [occupied] Jerusalem neighbourhood," Barak said about long-standing differences with Washington over the issue.

The Obama administration responded angrily last month when Israel announced a project to build 1,600 more homes for Jews in a part of the West Bank that it annexed to occupied Jerusalem.