Obama 'concerned' over Israeli settlement expansion in occupied territories

President Barack Obama raised concern over Israeli settlements in what could be the final meeting between the US leader and Prime Minister Binyamin Netanyahu.

The two leaders put on a friendly display in New York on Wednesday on the sidelines of the UN General Assembly.

But behind the warm exchanges, Obama discussed the recent spike in violence in the occupied Palestinian territories, which could undermine prospects of a two-state solution.

"Clearly there is great danger of not just terrorism but also flare-ups of violence," Obama said.

"We do have concerns around settlement activity as well, and our hope is that we can continue to be an effective partner with Israel."

Despite the smiles, the pair have had a frosty relationship since they both took office in 2009.

Washington has criticised Israel's ongoing and accelerating building of settler homes in the West Bank, home to more than 2.7 million Palestinians.

The Palestinians hope to establish an independent state in the West Bank along with the Hamas-controlled Gaza Strip and East Jerusalem as its capital.

The last round of peace talks between Israel and the Palestinian Authority ended in April 2014 with no results.

Meanwhile, Netanyahu's government was an angry opponent of Obama's nuclear deal with Iran.

However, both sides recognise each other as close allies, with Obama offering Israel $38 billion in military assistance over the next ten years - the biggest pledge of defence aid in US history.

"It allows the Israelis to have some kind of certainty in a moment when there's enormous uncertainty in the region. It's a very difficult and dangerous time in the Middle East," Obama said on Wednesday.

"It is important for America's national security to ensure we have a safe and secure Israel, one that can defend itself."

Netanyahu also hailed an "unbreakable bond", saying: "Our alliance has grown decade after decade, through successive presidents, bipartisan Congress and with the overwhelming support of the American people".

Obama and Netanyahu both took office in 2009 and have had several spats over the years.

Earlier this year, for example, the White House learned through the media that the Israeli leader had cancelled a visit.

In March 2015 during a re-election battle Netanyahu defied decades of US-Middle East policy by rejecting the idea of a Palestinian state, only to reverse his own position a few days later once he was back in office. 

A smiling Obama noted on Wednesday that his guest "has always been candid with us".