JERUSALEM (AFP) - Middle East Quartet envoy Tony Blair on Monday emerged from talks with new Israeli Prime Minister Benjamin Netanyahu saying a Palestinian state was the only solution to the Middle East conflict. My view is that he does understand that if the right context would be created for peace, the only lasting peace is based on a two-state solution, Blair said after his meeting with the hawkish Israeli leader. The only solution that will work which is two states living side by side in peace, said Blair, the former British prime minister who now represents the diplomatic Quartet made up of the European Union, Russia, the United Nations and the United States. He said the priorities at this stage were to hold a credible political negotiation for a two-state solution, measures to improve life in the Palestinian territories and a lifting of the blockade of the Gaza Strip. Meanwhile, the Palestinian Authority on Monday welcomed US President Barack Obamas renewed support for the Annapolis agreement and the stalled roadmap plan for Israeli-Palestinian peace. At the same time, the Israeli government hailed what it said was Obamas commitment to Israels security. Leading Palestinian negotiator Saeb Erakat focused instead on the statements by President Obama confirming the principle of a two-state solution. Israel should understand that the track leading to an end of the occupation since 1967 of the Palestinian and Arab territories and to the start of a two-state solution is the only track that can be followed, said Erakat. PM Netanyahus spokesman, said Israel appreciates Obamas commitment to Israels security and to the pursuit of peace. The government of Israel is committed to both of these goals and will formulate its policies in the near future so as to work closely with the United States towards achieving these common objectives, said Mark Regev. In an address to Turkeys parliament on Monday, Obama said the United States strongly supports the goal of two states, Israel and Palestine, living side by side in peace and security. His remarks came after Israels new Foreign Minister Avigdor Lieberman said last week that the 2007 Annapolis document did not bind Israel though he did accept the roadmap as the basis for progress. A November 2007 conference in Annapolis, near Washington, relaunched peace negotiations on the basis of the roadmap, although dozens of rounds of talks between Israel and the Palestinians have produced little visible progress.