In its first reaction to the speech, the Israeli government said it shares Obama's hope that his outreach to the Muslim world will be "the beginning of the end" of conflict and lead to general Arab recognition of Israel.
"The Israeli government expresses its hope that President Obama's important speech in Cairo will indeed lead to a new era of reconciliation between the Arab and Muslim world and Israel," an official statement said, asserting that Israel is committed to peace and will "do all it can" to widen regional peace while preserving its security interests.
Political sources in Jerusalem said that they expected the topic of a two-state solution, as well as a settlement freeze, to be broached, having been alerted of this in advance by the Americans. Meanwhile, they expressed satisfaction at Obama's insistence on the recognition of the State of Israel.
'US-Israel bond unbreakable'
Defense Minister Ehud Barak praised the speech, calling it a "direct, significant and brave appeal in which President Obama elucidated his vision and important universal principles, which he wishes to share with the Muslim world."
"The speech contains support and encouragement for moderate and peace-seeking parties as well as censure of terror and extremist violence that threaten regional stability and world peace," Barak said.
"We praise the president for his commitment to the existence and security of the State of Israel and his clear call for the inclusion of Israel in the region," he added.
Foreign Minister Avigdor Lieberman said the speech was built upon the principles of justice, progress and democracy, as well as a vision of a better world.
"This speech is highly significant because President Obama sees the Road Map and its first stage – the cessation of violence – as a critical step towards a final agreement. As the president says, the connection between the US and Israel is a strong and unbreakable one that will maintain despite times of legitimate disagreement," he said.
President Shimon Peres also lavished praises on the speech, saying it was "full of vision, a brave speech demanding a commitment to hard work on all sides involved in the promotion of the peace process in the Middle East."
"The idea of peace was born in the Middle East as the basis of the three monotheistic religions – Christianity, Judaism and Islam – and the sons of Abraham must join hands in order to take on this challenge together, a sustainable peace in the Middle East," Peres said.
But other sources criticized the US president for glossing over the fact that the Palestinians have yet to abandon terror, some even going so far as to call the Obama approach a policy of defeatism.
AP contributed to this report