Earlier in the week, Lieberman also stated that Israel was ready to invest in infrastructure in the Gaza Strip when the local Palestinian authority, Hamas, stops firing rockets across the border.
"My vision, is no doubt, a two-state solution. I believe what is necessary for us is to keep a Jewish state," Lieberman said at the Munich Security Conference.
The two-state solution has long been viewed by the international community as the only realistic way to end the conflict.
However, the boundary between the two states is still subject to dispute and negotiation, with Palestinian and Arab leadership insisting on the "1967 borders," which is not acceptable to Israel.
Moreover, Israel's settlement expansion into the Palestinian territories has put the realization of the plan in question.
Lieberman noted that a solution of the Israeli-Palestinian conflict is possible only within the framework of a regional agreement between Israel and the Arab world and Palestinians.
"The Palestinians do not have a capacity to sign a final status agreement with Israel. It is possible only as a part of all regional solution. We must sign simultaneously a regional solution with the Arab world and Palestinians," Lieberman said.
The Israeli Defense Minister also stated that the resolution of the conflict between Israel and Palestine should include "an exchange of population," as it would make more sense.
"I believe that there is a… misunderstanding because today on the table we have a proposal to establish a Palestinian state without a single Jew and Israel will become a binational state where more that 20 percent of the population are Palestinians. I think that the basic principle of solution must include an exchange of population. It doesn't make sense or create one homogenous Palestinian state and binational state of Israel," Lieberman said at the Munich Security Conference.