In a telephone interview with commentators in the Jewish media, the Democratic candidate described Hamas and Hizbullah as constituting an existential threat on Israel, but said she would consider such limited talks if elected president.
Clinton harshly criticized US President George W. Bush for allowing Hamas to take part in the Palestinian Authority general elections in 2006.
"It was a mistake for the Bush administration to take a hands-off approach to the Arab-Israeli conflict. Israel is more vulnerable today that it was eight years ago," she said.
She said that the moves undertaken by her husband (former US President Bill Clinton) resulted in a drop in the number of terror attacks.
"I think what we did in the '90s was beneficial in a strategic way and led to a period where, at times, there were no attacks being made, no suicide bombings and no deaths," she noted.
Clinton went on to say that the Bush administration returned to the right track with the Annapolis peace conference last December, but expressed her concern that Prime Minister Ehud Olmert and Palestinian President Mahmoud Abbas were not strong enough leaders to advance the process.
Addressing the Iranian nuclear issue, the senator refused to say how she would act as president should it become clear that Iran has obtained a nuclear weapons.
According to Clinton, the right policy against the Iranian threat would be a combination of increased sanctions and low-level talks.
As opposed to her rival, Senator Barack Obama, who has said he may meet with the Iranian president should he be elected, Clinton believes that talks should only be held at a low level.
"If we did ever have to take action against Iran, we would have demonstrated to the rest of the world that we had exhausted other possibilities," she noted.