The issue of Jerusalem is not on the table in peace talks between Israel and the Palestinians because the city will never be divided, Finance Minister Yair Lapid told Israel Radio on Tuesday.

Lapid stated that Jerusalem is the "founding ethos" of the State of Israel and cannot be divided under any circumstances.

"If the Palestinians want a state, then they must know that this has a price and they will not get everything they want," Lapid said.

Lapid's comments came in response to a Tuesday morning Israel Radio report that Jerusalem was one of the topics under discussion in ongoing peace talks with the Palestinians.

According to the report, Justice Minister Tzipi Livni, who heads the Israeli negotiations team and Prime Minister Binyamin Netanyahu's representative, Yitzhak Molcho, argued amongst themselves during a meeting with Palestinian negotiators about the size of the area designated for the free movement of Israelis and Palestinians in Jerusalem.

The finance minister reiterated that he does believe in a two-state solution, adding that dividing the country will be "painful," and will entail large evacuations that will "tear us to pieces."

Lapid said that when the time comes for settlements to be evacuated as part of a peace deal, it is likely that general elections will be moved up, or at the least, a national referendum will be held.

The finance minister's comments came as US Secretary of State John Kerry was set to land in Israel as part of his ongoing efforts to advance the peace process.

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