Israeli Prime Minister Binyamin Netanyahu and his British counterpart Gordon Brown have held Downing Street talks on the future of the Middle East peace process.

The leaders discussed the future development of West Bank settlements and the threat posed by Iran’s nuclear programme.

Speaking at a joint press conference following their meeting, Mr Brown said: “We share Israel’s concerns over Iranian ambitions to develop a nuclear weapon. The region and world have nothing to fear from a civilian nuclear programme in Iran, but Iran’s actions do not make their arguments convincing. Iran must cooperate with the international community. I hope Iran will make the right decision.

“We share with Israel a common desire for peace in the Middle East.”

Mr Netanyahu reiterated Israel’s support for the peace process, saying he would support a demilitarised Palestinian state that recognises the Jewish state. He said he hoped progress could be made “in the weeks and months ahead”.

If there’s firm resolve by the international community to apply crippling sanctions then I think the Iranian regime will have to make a very difficult decision about its future. Binyamin Netanyahu

Israel has closed hundreds of West Bank checkpoints and had worked to make movement for Palestinians easier, he said.

Speaking about Iran’s nuclear progress, Mr Netanyahu added: “Time is running out. It’s late in the day but it’s not too late. If there’s firm resolve by the international community to apply crippling sanctions then I think the Iranian regime will have to make a very difficult decision about its future.”

He said the Palestinians must provide a “courageous partner” and say unequivocally “it’s over, we will make a final peace”. Arab recognition of Israel would be “pivotal”, Mr Netanyahu said.

He said Mr Brown was a “true friend of Israel” and a “champion of decency”.

Mr Brown was also asked for his reaction to the release of Lockerbie bomber Abdelbaset Ali al-Megrahi.

He said he had been “repulsed” by the welcome al-Megrahi had received in Tripoli. The Prime Minister said the decision to release him was a matter for the Scottish government and that Downing Street had had “no role” in the matter.

Hundreds of pro-Palestinian protestors had gathered outside Downing Street as Mr Netanyahu arrived for the meeting, chanting “Free Palestine”.

Mr Netanyahu will hold a meeting with US special envoy to the Middle East George Mitchell on Wednesday, before travelling to Berlin for talks with German Chancellor Angela Merkel.