JERUSALEM (AFP/Reuters) - Israels foreign minister warned on Monday against attempting to impose a Middle East deal, saying the most peace talks can achieve for the coming year is improving security and the Palestinian economy. The Palestinians radical and uncompromising positions on Jerusalem, the right of return and the settlement blocs create an unbridgeable gap between us and them, Avigdor Lieberman told a delegation of US Democratic lawmakers. Therefore, Israeli policy must be based on reality and not illusion while maintaining the dialogue between us and the Palestinians, improving security arrangements and the economic condition of the Palestinians. This is the maximum we can reach in the coming years, Liebermans office quoted the ultra-nationalist minister as saying. Any other extravagant goal such as imposing an agreement that is limited in time, would again end in failure, disappointment and even confrontation, he told the US delegation. This is a realistic policy and all the rest is spin, public relations and lack of understanding of the processes taking place at this time. Lieberman on Monday also lashed out at Nadav Tamir, Israels consul in Boston who had warned in a leaked memo that the governments policies on settlements were harming ties with the United States. Anyone who disagrees with, and is uncomfortable with government policies can resign, his spokesman quoted him as saying. President Shimon Peres later told the delegation Israel had agreed to stop building new settlements and that the only unresolved issue was construction within the bounds of those already there. Peres also said Israel and the Palestinians were for now incapable of agreeing over key sticking point Jerusalem. Meanwhile, a key political ally of Prime Minister Benjamin Netanyahu said on Monday that Israel must go ahead with plans to expand a Jewish settlement enclave in occupied land despite US objections. The remarks by Interior Minister Eli Yishai of the religious Shas party illustrated the pressure Netanyahu faces from his right-wing coalition partners to resist Washingtons calls to freeze settlement construction in the occupied West Bank. You cannot tell us we must not build within the settlement blocs, said Yishai, whose party holds a pivotal number of seats in Netanyahus four-month-old coalition, on a visit to a West Bank settlement. Yishai said he hoped Israel would persuade US President Barack Obama that expanding settlements near Jerusalem, that Israel seeks to keep under any future peace deal, was vital for security, national interests and is just and necessary. Yishai was visiting a hilltop known as Area E, which Israel seeks to build on to create territorial contiguity between a larger neighbouring settlement, Maaleh Adumim, and Jerusalem. Meanwhile, Israel warned on Monday that the Lebanese government as a whole would be blamed for any attack from its territory if the Shia group Hezbollah is part of the new government. If Hezbollah joins the government it will be clear that the Lebanese government will be held responsible for any attack coming from its territory against Israel, Prime Minister Bejamin Netanyahu said. The moment they are part of the government, the sovereign Lebanese government is responsible. I hope we will not need such responses, he told journalists during a visit to southern Israel. If Hezbollah touches a single hair of an Israeli official or an Israeli tourist abroad, it will suffer the consequences and they will be very serious, Ayalon told public radio. Earlier a senior Hezbollah leader said any Israeli attack on Lebanon would bring a stronger response from Hezbollah than in 2006. If (Israeli Defence Minister Ehud) Baraks threats are serious and I dont think they are he should be aware that if he commits an error or stupid act against Lebanon... he will discover that the months of July and August 2006 were just a bit of fun, Hezbollah executive council chairman Hashem Safieddin said.