German Chancellor Angela Merkel on Thursday called on Israel to end settlement construction, saying it jeopardized efforts toward a two-state solution.

"I think it is now important to get commitments from all sides and that includes the issue of settlement building," Merkel said in a speech to the Bundestag lower house of parliament. "I am convinced that there must be a stop to this. Otherwise we will not come to the two-state solution that is urgently needed."

Merkel's remarks apparently echoed the positions of the European Union and the United States.

Much of the contention over the issue surrounds natural settlement growth, which Israel insists must go on. RELATEDWexler: Israel will freeze settlementsSettler leaders vow to push PM to avoid concessions to the US

Speaking about the natural growth issue on Israel Radio on Thursday morning, Deputy Foreign Minister Danny Ayalon said that Israel "cannot strangle 300,000 residents."

Ayalon also said that Israel cannot be expected to take immediate measures when "the other side isn't even prepared to make a small step."

The deputy foreign minister stressed that any move on settlements would be made as part of a regional agreement, and that Israel and the US saw "eye-to-eye" on a final status deal to resolve the Middle East conflict.

Before heading back to Israel from New York on Wednesday morning following his meeting with US Mideast envoy George Mitchell, Defense Minister Ehud Barak told the radio station that Israel was close to an understanding with the US on settlements, which he stressed were part of a regional comprehensive peace effort.