Israeli prime minister Benjamin Netanyahu was "prepared to make an historic peace with our Palestinian neighbours" if Palestinian president Mahmoud Abbas recognised the Jewish state, he told an audience in Washington.

"President Abbas, recognise the Jewish state," Netanyahu told delegates at the annual American Israel Public Affairs Committee (AIPAC). "In doing so you will tell your people that, though we have a territorial dispute, Israel's right to exist is beyond dispute.

"You would finally make it clear that you are truly prepared to end the conflict. No excuses - it is time. It's time for the Palestinians to stop denying history."

He added that Palestinians must be able to recognise the Jewish state in the same way that Israel is prepared to recognise a Palestinian state.

Netanyahu said: "[A] combination of Israeli innovation and Gulf entrepreneurship could catapult the entire [Middle East] region forward."

Netanyahu also dismissed the Boycott, Diversity and Sanctions (BDS) movement as doomed to fail.

"The movement is nothing but a farce," he told delegates.

He moved on to Israel's alliance with the United States and the Iranian nuclear controversy. Both Israel and the US were "on the right side of the moral divide and of history", he claimed.

If Iran were allowed to continue enriching uranium, Netanyahu warned it would "open a Pandora's box in the Middle East and around the world".

"Seventy years ago, Jews were left for dead," he said. "But we came back to life and we will never allow ourselves to face extinction again."