Israel will only sign a peace agreement with the Palestinians if its security and the PA's demilitarization are guaranteed, Prime Minister Binyamin Netanyahu said on Monday, ahead of the release of a third group of Palestinian terrorists.

"Our vital interests lie before us during these negotiations, including assuring the settlement of the land of Israel. A peace agreement will only be signed if these vital interests are assure, particularly our security and their demilitarization," he said.

"Only if Israel remains the Jewish people's state, and only if the Palestinians give up the dream of return and their other demands from the Jewish state's territories - only then can we reach an accord," the premier added.

The prime minister added he will hold a referendum on any agreement before it is signed.

"Our willingness to enter negotiations [with the Palestinians] is related to our ability to navigate regional turmoil as well as related to other strategic needs the State of Israel has," Netanyahu said at the Likud faction meeting.

Netanyahu's comments come a day after the Knesset's Ministerial Committee for Legislation voted in favor of a bill proposal to annex the Jordan Valley and apply Israeli law onto the entire area.

This bill proposal was criticized by politicians both inside and outside the coalition.

Israel's chief negotiator, Justice Minister Tzipi Livni, as well as Finance Minister Yair Lapid and Health Minister Yael German were all against the proposal and are likely to appeal it.

Livni assailed the Right on Monday morning, criticizing the groups who send their families to establish new illegal outposts in the West Bank, implying that they endanger and encumber the IDF with defending them as well as misusing the state's funds which could otherwise be used to improve the inflated housing prices across the country.

The justice minister also said that she was angry with those who "are happy whenever they can say that there is no peace partner," so they tell us "do not even try."

She added that really these same groups would say that "even if there was a partner we should not give up one meter of land, because they are not really ready for any compromise."

"The question is not whether or not there is a partner [for peace]. We need to set a goal and act, and if there is no Palestinian partner - we must sign an agreement with the world," she said.

Livni's comments received a mocking response from Economy Minister Bennett who suggested that if the Palestinians are not partners for peace, Israel should make peace with aliens.

During the Likud faction meeting, Prime Minister Netanyahu touched upon that issue of whether or not Israel has a partner on the other side.

"Both sides took commitments upon themselves when the talks began, like avoiding unilateral steps at international forums," he said, referring to the Palestinian commitment.

Netanyahu also referred to the Israeli commitment to release 104 Palestinian security prisoners in four groups, the third of which is to be released on Monday night.

"True leadership is tested on the ability to to uphold decisions, hard as they may be," he said. "We were not elected to lead the State of Israel in order to make easy decisions."

Gil Hoffman and Yonah Jeremy Bob contributed to this report.

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