Prime Minister Binyamin Netanyahu said that the Palestinian Authority needs to choose between peace with Hamas and peace with Israel, addressing the Knesset plenum on Tuesday.

"How can you talk to us about peace when you're talking about peace with Hamas," the prime minister asked. "You can choose [to make] peace with Israel or you can choose peace with Hamas."

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Netanyahu also continued his recent criticism of the Palestinian Authority's incitement against Israel and honoring of terrorists.

Addressing the anti-government violence and war taking place in Libya, Netanyahu repudiated the notion that the Arab revolutions began in Tunisia early this year. He said that the revolutionary wave began in Tehran one-and-a-half years ago.

Seemingly speaking to western powers who have accused Libyan leader Muammar Gaddafi of war crimes and are now taking military action against his regime, the prime minister said that similar measures should be taken against Iran's leadership.

Netanyahu also addressed the criticism he has received for approving several hundred housing units in the West Bank immediately following the terror attack in Itamar. He said the building permits were not punishment for the murders, but were Zionism's answer to them. "There has been a great deal of building that was done as an answer to killing" in the past, he said."

He listed several cities, moshavim and kibbutzim that were established after similar massacres of Jews in the state's early years. One example he presented was Kiryat Shmona, which was named after the eight people killed in the battle of Tel Hai.

"Terror will not determine the map of the settlements," Netanyahu said. The Palestinians "want to remove us from every place [in Israel]," adding that the decision to respond to the murders with building was not done instead of finding the murderers, but in addition to it.

Addressing Palestinian President Mahmoud Abbas' condemnation of the Itamar murders on Israel Radio, Netanyahu reiterated his previous demand that Abbas "needs to say those things to the Palestinian media, and to say them there every time that [an attack] happens."

Additionally, he criticized Abbas for "flying all over the world," but not being willing to drive the ten minutes to Jerusalem and hold peace talks.

Responding to heckling from MK Ahmed Tibi who asked Netanyahu if he was ready to condemn the deaths of several children in the Gaza Strip only hours earlier, Netanyahu distinguished between accidental deaths of innocent civilians during a legitimate military operation and the type of murder that took place in Itamar.

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