Updated

Israeli Prime Minister Benjamin Netanyahu warned ministers Sunday that renewed peace talks with the Palestinians will be tough, and said any draft treaty would be put to a referendum.

US Secretary of State John Kerry on Friday said Israeli and Palestinian negotiators had agreed to meet to prepare a resumption of direct peace talks, stalled since 2010.

"Negotiations won't be easy but we're entering them honestly, sincerely," Netanyahu told ministers at the weekly cabinet meeting, the first since Kerry's announcement.

The premier repeated pledges that if the talks produced a draft treaty he would put it to a referendum.

He also said he hoped the negotiations would be held "in a responsible, practical and serious manner".

Netanyahu spoke after two hardline ministers in his rightwing government came out strongly against any possible slowdown in Jewish settlement building as part of the deal.

"We must not have a freeze," Transport Minister Israel Katz, a member of Netanyahu's own Likud party, told public radio.

"It would be immoral, un-Jewish and inhuman to freeze the lives of people and their children."

Israeli media have said that while there will be no formal declaration of a settlement freeze, a key Palestinian demand for talks to resume, Netanyahu will quietly halt building for the time being.

"The official policy is what counts," Katz added. "I am against a freeze and I don't believe that such a thing will happen. Settlement is strong and growing."

The last round of direct talks between the two sides nearly three years ago broke down over the issue of Israeli settlement building in the West Bank and east Jerusalem.

Housing Minister Uri Ariel of the far-right Jewish Home party told public radio on Sunday that he did not want to consider even a limited freeze.

"It's inappropriate for the Jewish people, for the land of Israel and for a sovereign state," he said. "We are in favour of building as much as possible."

Kerry on Friday gave away very little about the agreement, which came after four days of frenetic consultations with Israeli and Palestinian leaders on his sixth mission to the region in as many months.

But Palestinian president Mahmud Abbas has repeatedly stressed that his demands for a freeze to Israeli settlement building on occupied land and release of prisoners held by Israel must be met before talks can resume.

Intelligence Minister Yuval Steinitz on Saturday announced there would be the release a "limited" number of Palestinian prisoners as a "gesture" for the talks.

Katz on Sunday took issue with this.

"I personally oppose the release of terrorist murderers. If the matter arises in future in the cabinet I shall vote against it," he said.

Israeli President Shimon Peres's office said on Sunday he called Abbas late on Saturday, welcoming the Palestinian leader's decision to renew talks.

"You took a brave and historic decision to return to the negotiating table," Peres was quoted as telling Abbas. "Don't listen to the sceptics, you did the right thing."