* Biden says Israel should 'dismantle existing outposts'
* He says Palestinians must halt militant attacks
* Biden reiterates commitment to talk to Iran
By David Alexander
WASHINGTON, May 5 (Reuters) - The United States stepped up pressure on Israel's new right-leaning government on Tuesday to accept the goal of a Palestinian state and halt expansion of Jewish settlements on occupied land.
Israeli Prime Minister Benjamin Netanyahu has so far shied away from publicly supporting a two-state solution to the Israeli-Palestinian conflict, an omission that has dismayed U.S., Arab and European officials.
"Israel has to work for a two state-solution -- you're not going to like my saying this -- but not build more settlements, dismantle existing outposts and allow Palestinians freedom of movement ... and access to economic opportunity," Vice President Joe Biden said.
His comments in a speech to the American Israel Public Affairs Committee, the leading U.S. pro-Israel lobby, went further than remarks made by President Barack Obama in his White House meeting last month with Jordan's King Abdullah in which he reiterated his support for a two-state solution.
Biden also said the Palestinian Authority "must combat terror and incitement against Israel."
Obama is due to meet Israeli President Shimon Peres at the White House later on Tuesday and Netanyahu on May 18.
In a speech by video-link to AIPAC on Monday, Netanyahu said he was ready to begin Israeli-Palestinian peace talks immediately but he made no reference to a Palestinian state.
Obama has made clear his own commitment to the two-state solution, which has been the basis for U.S. policy in the Middle East conflict for years, and has nudged Netanyahu to accept the goal of a Palestinian state alongside Israel.
TALKING TO IRAN
Peace talks have stalled amid continued Israeli settlement building in the occupied West Bank and persistent anti-Israeli violence. The Palestinians broke off negotiations after Israel launched a Gaza offensive in December.
The 2003 U.S.-backed Middle East "road map", introduced by the Bush administration but widely ignored by both sides, called on Israel to halt settlement building and for the Palestinians to rein in militant attacks.
The international community considers settlements on occupied land to be illegal. Israel disputes this. Palestinians say continued settlement expansion undermines their aspirations for a state of their own.
Obama has pledged to make Middle East peace a high priority, in contrast to former President George W. Bush, who was widely accused of neglecting the conflict. Many Arabs also said the Bush administration was biased in favor of Israel.
Biden also focused on the Obama administration's efforts to persuade Iran to abandon its nuclear program, which Israel sees as a cover for building nuclear weapons and a threat to its existence. Iran says its program is for the peaceful production of electricity.
"We will pursue direct, principled diplomacy with Iran with the overriding goal of preventing it from acquiring nuclear weapons," Biden said.
Israeli officials have voiced concerns about what they see as a possible softening of Washington's approach to Tehran, and Israel has not ruled out the use of military action against Iran's nuclear facilities.
"The United States will approach Iran initially in the spirit of mutual respect -- we want Iran to take its rightful place in the community of nations politically and economically," Biden said. (Writing by Ross Colvin and Matt Spetalnick; editing by Mohammad Zargham)
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