President Trump said helping to broke a peace agreement was "very, very important", adding: "I really believe they're gonna make a deal. "
But he warned both sides will have to make compromises.
He said: "I think the Palestinians will have to get rid of some of the tremendous hate they're taught from a young age."
Donald Trump and Benjamin Netanyahu outside the White House with their wives
We'll be working on it very, very diligently
President Trump said: "Our administration is committed working towards a peace agreement between Israel and the Palestinians.
"We'll be working on it very, very diligently. It's very important to me personally."
"But it is the parties themselves who must directly negotiate such an agreement
Being President Trump: Key Moments Fri, February 3, 2017
Inside Donald Trump's first week in the White House.
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Trump signs an order to review the Dodd-Frank Wall Street to roll back financial regulations of the Obama era.
Mr Netanyahu, who experienced a combative relationship with Barack Obama, thanked Mr Trump for his "truly warm hospitality".
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Officials said they wanted no gaps to emerge between U.S. and Israeli thinking during the scheduled two-hour Oval Office meeting.
Mr Trump also condemned the "very, very unfair" treatment of Michael Flynn by the media.
Mr Netanyahu praised Mr Trump's proposals to tackle the threat of Islamist terrorism.
During last year's election campaign, Trump was relentlessly pro-Israel in his rhetoric, promising to move the U.S. embassy from Tel Aviv to Jerusale.
And he backing David Friedman, an ardent supporter of Jewish settlements, as his Israeli envoy and saying that he would not put pressure on Israel to negotiate with the Palestinians.
Trump appears to have put the embassy move on the backburner, at least for now, after warnings about the potential for regional unrest, including from Jordan's King Abdullah.
And rather than giving Israel free rein on settlements, the White House has said building new ones or expanding existing ones beyond their current borders would not be helpful to peace.
That would appear to leave Israel room to build within existing settlements without drawing U.S. condemnation, in what is the sort of gray area the talks are expected to touch on.
For the Palestinians, and much of the rest of the world, settlements built on occupied land are illegal under international law.
Israel disputes that, but faces increasing criticism over the policy from allies, especially after Netanyahu's announcement in the past three weeks of plans to build 6,000 new settler homes in the West Bank and East Jerusalem.
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