Prime minister to use set-piece speech to Knesset on first visit to Israel to urge compromises on Israeli and Palestinian sides

David Cameron is to use a set-piece speech to the Israeli parliament on Wednesday to try to map out a vision of how the fortunes of Israel and Palestine could be transformed if both sides could reach agreement on a two-state solution.

In a two-day visit he will urge both sides to make compromises and say Israel can become a secure Jewish nation state, stopping short of describing Israel as a Jewish state – the status sought by Israel but rejected by the Palestinians.

Cameron has been kept closely informed of the state of the framework talks being conducted by the US secretary of state, John Kerry, which are due to conclude in April. Cameron is making his first visit to Israel since becoming prime minister, and will visit the Palestinian president, Mahmoud Abbas, on Thursday.

He will also briefly meet former British prime minister Tony Blair in Jerusalem in the latter’s capacity as envoy of the Quartet on the Middle East. Blair has been a student and participant in the Middle East process for a decade and has been working for nearly six years as envoy for the UN, EU, US and Russia to build the economy of the Palestinian territories, as well as help build institutions capable of nurturing growth. Blair’s efforts have been partly thwarted until last year by the absence of a peace process, but has been working to lift the massive travel and trade restrictions imposed on Palestinians in Gaza and the West Bank by the Israeli authorities.

Cameron rejected suggestions he had been personally disengaged from the Middle East peace process, saying he had “many overseas visits to schedule and had enjoyed very many meetings with Israeli prime minister Binyamin Netanyahu, and Israeli politicians. It is a great honour to speak at the Knesset.”

He added: “The aim in travelling to encourage both sides in the peace process and to take the bold and difficult decisions to deliver the two-state solution we all want to see. My speech will all be about imagining what the future would look like if the two-state solution went ahead. That would be a compelling prospect.”

Cameron’s team is anxious not to do anything to cut across the microscopic diplomacy being conducted by Kerry on issues such as borders, the status of Jerusalem, land swaps on the West Bank, and ways of bolstering Israeli security in the Jordan valley.

The British calculation is that the blockage to peace may not lie in detailed disputes over decades-old points of disagreement, but in a fundamental wariness on both sides to see the huge potential economic, political and security benefits of reaching a deal.

Both William Hague, the foreign secretary, and the US president, Barack Obama, have spoken of Kerry’s shuttle diplomacy as if it represents the last chance for peace, with this warning backed by often elusive suggestions that Israel will lose international diplomatic support. Neither Cameron nor Obama have spoken in terms of business disinvestment or sanctions. Indeed, Cameron is bringing a business delegation with him designed to deepen economic ties between the UK and Israel.

He also sought to reassure a nervous Israel about the negotiations under way with Iran designed to lift sanctions in return for commitments on an Iranian civil nuclear programme. Israel claims in the last few days to have intercepted weapons from Iran, which it says proves that the more western faced regime is merely a facade.

Cameron said he had discussed Iran with Netanyahu, and defended the interim agreement “as a good and worthwhile one. We need to build on that with a permanent agreement. The aim is clear – that we do not want to see a nuclear-armed Iran. The interim agreement takes us steps further away from a nuclear Iran, and a permanent deal needs to go further.”

He insisted: “I am a staunch defender and supporter of Israel. I have always made it clear we want to see a peace process.”