JERUSALEM (AFP) - Outgoing Prime Minister Ehud Olmert has warned his likely successor Benjamin Netanyahu that he risks isolating Israel on the world stage unless he agrees to the creation of a Palestinian state, media reported on Monday. "The only choice is between two states for two people or one state for two people," local media quoted him as saying at Sunday's cabinet meeting. "Those who don't see this are lying to themselves and are risking causing great damage to Israel" including "losing its international support." "Anyone who goes into a government whose coalition guidelines do not include the principle of two states for two peoples is knowingly liable to subject Israel to isolation, the likes of which it has never known since its establishment," he said. "History will not forgive them," he said. Netanyahu, the leader of the right-wing Likud party, opposes the creation of a Palestinian state for the moment, saying economic conditions in the occupied West Bank must improve before negotiations take place on any other issues. In his last months in office, after he announced he would step down to fight corruption allegations, Olmert has repeatedly spoken out in favour of the stalled peace process. A lifelong right-winger, Olmert underwent a change over the past several years, coming to the conclusion that unless Israel gave up occupied Palestinian lands it would lose its democratic Jewish character as eventually Palestinians would outnumber Jewish Israelis. Olmert's comments also appeared to target the head of the Labour party, outgoing Defence Minister Ehud Barak, who supports a two-state solution but is willing to join a Netanyahu cabinet without the Likud leader committing to the principle.