"The remarks made by Minister Ya'alon are unacceptable, neither in their essence nor in their style, and do not represent the government's stance," Netanyahu said in a statement.
While the vice premier's office said he stood behind the things he said, the Prime Minister's Office said that Ya'alon would be summoned for a face-to-face meeting with Netanyahu.
Many politicians were outraged by the remarks, which were made by Ya'alon during a meeting with members of the Likud's Jewish Leadership division, headed by Moshe Feiglin.
When asked by one of the attendees about plans to dismantle the Bnei Adam outpost, Ya'alon responded, "We again are dealing with the issue of the virus, Peace Now – the elitists, if you may – who have incurred great damage. From my perspective, Jews can and need to live in all of the Land of Israel for all eternity."
One of the harshest responses to these remarks came from Knesset Member Ophir Pines-Paz (Labor), who essentially called for the vice premier's dismissal. "Ya'alon has revealed his real face. Like many before him, he found refuge in wild incitement against the peace camp," the MK said.
"I call on him to immediately take back his remarks, and call on the prime minister to condemn and denounce him. Those who do not believe in peace should not be part of Israel's governments."
Associates of Labor Chairman Ehud Barak expressed their discontent with the remarks as well, but refrained from attacking the defense minister's fellow government member.
"The discourse in the deep Right is irrelevant to the Israeli public. Peace Now is an integral part of the vital democratic discourse in the Israeli society," one of the aides said. "The grave statements made by Minister Ya'alon against the movement are disrespectful and do not dignify the person who made them."
'Remarks polluting public discourse'
Meretz Chairman Chaim Oron responded to the remarks angrily, saying that "the minister's statements are disgusting both in their content and their style. These are Kahane-like statements that pollute the public discourse, and allow it to deteriorate it into political violence.
"It is depressing and worrisome to see Ya'alon consorting with the likes of Feiglin and dealing in delegitimation and incitement against political rivals," MK Oron added.
Kadima used the opportunity to slam the government. "These are Netanyahu's true colors," said the party's spokesman. "Tonight the vice prime minister shattered into pieces Netanyahu's deception and illusion policy and proved where the government is really headed.
"As long as he is a member of the government, what Netanyahu says outside doesn't matter. What matters is what he promised Bogie (Ya'alon's nickname) inside. The Bibi-Bogie-Feiglin axis endangers Israel's interests and the ability to reach an agreement maintaining them."
Kadima MK Nachman Shai added, "The Netanyahu government is a useless maze of opinions and stances leading nowhere. Now it turns out that the No. 2 person in the government is joining the Feiglin gang to plan an internal coup."
Following Wednesday's report on his remarks, the vice premier's office released a statement saying that "the minister's opinions are known, clear and were written explicitly in his book – and he stands behind them."
"After many requests, and as part of his meetings with Likud members across the country, he agreed to meet with Jewish Leadership members," the vice premier's office said. "The meeting was held at the beginning of the week, and it was clear to the participants that it would be documented."
Roni Sofer contributed to this report