Israel's Netanyahu says won't build new settlements

JERUSALEM (Reuters) - Likud leader Benjamin Netanyahu, whose right-wing party is favored to win Israel's election next month, would expand Jewish settlements but not build new ones, a newspaper quoted him on Monday as saying.

"I have no intention of building new settlements in the West Bank," the Haaretz daily quoted Netanyahu as telling Middle East envoy Tony Blair during a meeting on Sunday in Jerusalem.

"But like all the governments there have been until now, I will have to meet the needs of natural growth in the population. I will not be able to choke the settlements," Netanyahu said.

A spokeswoman for Netanyahu confirmed his remarks.

Israel has cited natural growth in expanding existing West Bank settlements, in violation of a U.S.-backed peace "road map" that serves as the basis for negotiations with the Palestinians that resumed in 2007.

Palestinians say Jewish settlements, built on land that Israel captured in the 1967 Middle East war and deemed illegal by international law, could deny them a viable and contiguous state.

Netanyahu, who has spoken of shifting the focus of peace negotiations from Palestinian statehood to efforts to shore up the West Bank economy, also told the former British prime minister that if elected, he would deal with the Palestinian issue "very intensively."

"Every moment of stagnation isn't good," he was quoted as telling Blair.

Opinion polls show Netanyahu's Likud as favorite to win a February 10 parliamentary election. The campaign has moved into full swing following the end of Israel's 22-day offensive in the Gaza Strip.

Israel has said it intends to keep major settlement blocs under any land-for-peace deal with Palestinians. The two sides had failed to meet a U.S.-set deadline to seal an agreement in 2008.

U.S. President Barack Obama has said he would actively seek a lasting peace between Israel and the Palestinians. George Mitchell, Obama's envoy to the Middle East, is expected in Israel on Wednesday to try to revive the stalled peace talks.

(Writing by Joseph Nasr, Editing by Angus MacSwan)