Iran appears to recognise Israel for first time

President Mahmoud Ahmadinejad of Iran appeared to recognise Israel's right to exist for the first time yesterday when he said it would be "fine with us" if the Palestinians reached a two-state solution.

Asked if he would support an agreement between the Palestinians and Tehran's arch enemy, he said: "Whatever decision they take is fine with us. We are not going to determine anything. Whatever decision they take, we will support that. We think that is the right of the Palestinian people. However, we fully expect other states to do so as well."

Given his frequently stated hostility to Israel's existence, Ahmadinejad's words will not be treated by Western diplomats as a permanent shift in policy.