Steinitz's comments came during an interview with Britain's The Telegraph published Friday, Ynetnews reported.
"We are prepared to make considerable concessions and it's not going to be easy," Steinitz told the British newspaper. "Both sides will have to make very significant concessions and very difficult concessions. We will probably have to make very serious territorial concessions. And the Palestinians will have to make also both territorial concessions -- because there will be settlement blocks -- but more important still they will have to recognize the very existence of the Jewish people and the Jewish state."
Steinitz also said Palestine must be "demilitarized" if there is to be an end to the Israeli-Palestinian conflict, The Jerusalem Post reported.
"We are ready for two states for two people solution," he said. "If we reach an end of conflict peace agreement with the Palestinians, we will have a referendum. I can tell you, I am confident that most Israelis will support it -- even if we will have to make considerable and difficult concessions, including territorial concessions. But on one condition: that Israelis will be totally convinced that what we are getting in return is genuine, enduring peace and real security."