Israeli and Palestinian leaders began direct peace negotiations even as hard-liners on both sides vowed never to accept a deal.
One day after US President Barack Obama made a personal appeal for peace, Secretary of State Hillary Clinton welcomed Israeli Prime Minister Benjamin Netanyahu and Palestinian President Mahmoud Abbas to the State Department to begin talks aimed at establishing an independent Palestinian state.
"This will not be easy," Netanyahu said as talks began. "A true peace, a lasting peace, (would) be achieved only with mutual and painful concessions from both sides."
President Obama hopes the peace talks can reach a deal within a year. No talks have taken place for 20 months. Negotiators face deep divisions among both Israelis and Palestinians over the prospects for peace.
The Palestinian Islamist group Hamas, which seized control of the Gaza Strip from Abbas' Fatah party in 2007, denounced the talks and said it would keep on attacking Israelis.
Jewish settlers meanwhile vowed not to stop contruction in the occupied West Bank, saying they could never accept a "phony peace" that curbs their right to live in what they consider Israel's biblical homeland.
Four Israeli settlers were killed by Hamas in a shooting attack in the West Bank on Tuesday. Another two people were wounded in a similar attack by suspected Palestinian gunmen on Wednesday despite a crackdown by Palestinian police.