The Palestine Liberation Organisation said Tuesday that Israeli Prime Minister Benjamin Netanyahu would have to drastically change tack if peace talks were to resume.

"Launching a serious political process to save the peace process requires a radical change in the policies of the next Israeli government," the PLO Executive Committee said in a statement issued after a meeting in Ramallah chaired by Palestinian President Mahmud Abbas.

US Secretary of State Hillary Clinton had argued that Netanyahu's narrow electoral victory earlier this month did not torpedo hopes for peace with the Palestinians, but instead opened up a new chance for dialogue.

Netanyahu's Likud-Beitenu list emerged from last week's vote with the biggest single share of seats in the Knesset, but was weakened by a surge in support for Yair Lapid's centrist Yesh Atid party.

Party leaders are negotiating a new coalition, which is expected to have a center-right bent, and the talks are being watched for signs as to whether it will be able to revive the Middle East peace process.

Abbas wants Israel to stop building settlements in the occupied West Bank and East Jerusalem before a resumption of peace talks that have been stalled since September 2010.

Netanyahu has said he rejects any pre-conditions to peace talks, the outcome of which he says should allow Israel to retain control over some territory defined as Palestinian by the 1967 boundaries.