Ehud Barak said yesterday: "I don't think anyone thinks that a government headed by me will continue the settlement drive."
He made clear he was referring to a rash of new settlements, mainly around the West Bank city of Nablus, which were hurriedly established before the election.
It was the toughest statement by Mr Barak on the Jewish settlements on the West Bank and in Gaza since he was elected last month. Under Benjamin Netanyahu, the defeated prime minister, the number of settlers increased from 150,000 to 180,000, living among 2.5 million Palestinians.
A Palestinian spokesman said Mr Barak's words were "a step in the right direction".
The new Israeli parliament convened for the first time yesterday but Mr Barak is still a long way from forming a coalition government out of the 15 parties now sitting in the Knesset. Mr Barak's One Israel party, an alliance of the Labour party with two smaller parties, has only 26 seats out of 120 in the parliament.
The difficulty for the prime minister is that he needs to bring into his government either the right-wing nationalist Likud or the ultra-orthodox Shas party. But the election saw a deepening of the division between secular and religious Israelis. The left-wing Meretz party is refusing to enter a government to which Shas belongs.
Mr Barak would probably prefer Shas in his coalition, as it is ready for territorial compromise on the West Bank and over the question of returning the Golan Heights to Syria. Likud, though divided and demoralised since the election, is likely to oppose an Israeli withdrawal.
A problem for One Israel is that Shas is still in effect under the control of its leader, Aryeh Deri, who is facing a four-year prison sentence for accepting bribes. Mr Barak has demanded that he not only step down but cease to run Shas from behind the scenes.
Mr Barak says the peace process must take priority over other issues, partly because of the American political calendar. He means that by the end of this year the US will be absorbed in its presidential election and unable to play an effective role in peace negotiations. Mr Barak is expected to visit Washington in July.
Palestinians will welcome the new Israeli leader's statement about new settlements. The Palestinians have been worried by Mr Barak's hard line on negotiations with them. They fear he will move first on talks with Syria. Mr Barak says there will be no return to Israel's 1967 borders. Nor will he compromise on the status of Jerusalem.
In the past Mr Barak has said that Israel will keep heavily populated settlement blocs on the West Bank, but he has shown less interest in keeping smaller, more isolated settlements. Many of these were established with the express purpose of isolating Palestinian towns and villages and breaking up any future Palestinian state into a series of cantons.Reuse content