Tens of thousands of Palestinians erupted into cheers of victory across the West Bank yesterday as Palestinian President Mahmud Abbas made history in his people’s long quest for statehood as he asked the United Nations to admit Palestine as a full member state, handing over a formal application to UN chief Ban Ki-moon.

The Palestinian leader won huge applause and a partial standing ovation as he later addressed the UN General Assembly and vowed the Palestinians were ready to return to peace talks if Israeli settlement activities cease.

Later, Israeli Prime Minister Benjamin Netanyahu said he was extending a hand of peace to the Palestinian people, but accused its President Mahmud Abbas of rejecting peace efforts after making the UN bid.

“I extend my hand to the Palestinian people with whom we seek a just and lasting peace,” the Israeli premier told the United Nations General Assembly.

The US and other peace brokers yesterday then called for the Palestinians and Israel to resume direct peace negotiations within a month and commit to seeking a deal by the end of 2012.

Waving a copy of the request before the UN General Assembly, President Abbas said he had submitted an “application for the admission of Palestine on the basis of the June 4, 1967 borders” with Jerusalem as its capital.

He also called for Mr Ki-moon “to expedite transmittal of our request to the Security Council and I call upon the distinguished members of the Security Council to vote in favour of our full membership.”

“Here I declare that the Palestine Liberation Organisation is ready to return immediately to the negotiating table on the basis of the adopted terms of reference... and a complete cessation of settlement activities,” Mr Abbas told the UN General Assembly.

But he maintained previous peace talks were “smashed against the rocks of the positions of the Israeli government, which quickly dashed the hopes raised by the launch of negotiations last September.”

In his own speech, Mr Netanyahu repeatedly called on Mr Abbas to resume peace talks.

“Let’s get on with it, let’s negotiate peace,” Mr Netanyahu said shortly after Mr Abbas’s emotional speech.

In a dramatic plea the Israeli leader even called on Mr Abbas to meet with him yesterday at the United Nations to discuss Middle East peace efforts, saying that for once they were in the same city, even the same building.

“Let’s meet today in the United Nations,” he said. “I cannot make peace alone. I cannot make peace without you,” Mr Netanyahu said, adding “we are both sons of Abraham... our destinies are intertwined.”

The hardline premier reiterated his demand that a future Palestinian state should be demilitarised and recognise Israel as a Jewish state, dismissing Mr Abbas’s earlier claim that Jewish settlements were destroying chances for peace.

“The core of the conflict is not the settlements... The settlements are a result of the conflict, it is an issue that has to be addressed and resolved,” Mr Netanyahu said.

The heart of the dispute is “the refusal of the Palestinians to recognise the Jewish state in any borders,” Mr Netanyahu said.

Mr Netanyahu said Israel was prepared to make “painful compromises”.

“The Palestinians should live in a future state of their own, but they should be ready for compromise,” the Israeli leader said, adding the Palestinians had to ensure Israel’s security.

In central Ramallah’s Arafat Square, the crowd roared its approval at the news that Mr Abbas had handed over a formal request asking the UN to admit Palestine as a member state.

“Abbas we are your people and you truly make us raise our heads high,” they shouted. “With our souls and our blood, we will defend Palestine!”

The scene was similar in city centres across the West Bank, where massive crowds gathered in front of giant television screens to listen to Mr Abbas urge the international community to approve the membership bid.

Security services spokesman Adnan Damiri said “tens of thousands” had turned out to hear the address.

In the northern city of Nablus, the Al-Ashaqeen folk band entertained huge crowds in the run-up to the speech, while those gathered in Hebron cheered as a huge balloon decorated with a picture of Mr Abbas was released into the night.

In Ramallah, Mr Abbas’s West Bank headquarters, the mood was festive, with the crowd singing and dancing, including those on rooftops around Arafat Square.

“I can’t believe myself, I’m so happy. I’ve been here since yesterday,” said Bassima Mahmud, a government employee who sported a keffiyeh scarf.

But as Mr Abbas approached the UN podium to address the General Assembly, the jubilant crowds fell silent.

They listened, waiting for the moment he would officially announce he had handed over the request for the UN to accept Palestine as a full member state – and then they went wild.

Men and women jumped up and down, arm-in-arm, waving flags and chanting “God is great, God is great”.

“It’s just wonderful, it’s very emotional,” said Mona Matar, a professor of computer science at Bethlehem University. “I’m so lucky to live to see this day, us having the courage to say no to everybody. To see that Abbas does not care what Obama wants, but what his people want.”

At the end of the speech, the crowd again began to cheer, parents boosting their children onto their shoulders, and posing for pictures by giant posters featuring Mr Abbas and his predecessor Yasser Arafat.

The ghost of Arafat, the iconic Palestinian leader, loomed large over the proceedings, with the crowd frequently chanting his name and cheering at Mr Abbas’s mention of the former President.

“We really miss Arafat at this historical moment,” Prof. Matar said. “He was something special.”

But the crowds welcomed Mr Abbas’s speech, saying he had reasserted the rights of Palestinians on the international stage.

“Today we got back our dignity. Obama and America can go to hell. We don’t need their money, we need our dignity,” said Majed Hussein, a government employee who watched the speech in Nablus.

“It’s a historic, rational speech,” added 55-year-old Mo-hamed Abu Atwan, who listened to the address in Hebron. “He talked to the world in clear language and he spoke the words that Palestinians have always been saying.”

In Ramallah, reaction was also warm.

“I give it 100 out of 100,” said an enthusiastic Yasser al-Shaer, whose four-year-old son was wriggling on his shoulders, glancing at the sea of flags around him.

“I’m 100 per cent with Abu Mazen. I’m so optimistic and I hope all the countries of the world will recognise us.”

The uplifting mood was in sharp contrast to that in Gaza, where the Hamas rulers and Mr Abbas’s Fatah party had agreed that no rallies would take place.

And it came after a day of clashes at flashpoints across the West Bank, including in the village of Qusra, south of Nablus, where a Palestinian man was shot dead by Israeli troops in clashes that erupted after an attack by settlers.

Hospital sources named the man as 37-year-old Issam Badran, and said he died after being hit in the neck by a live bullet.

Another three Palestinians were lightly wounded by rubber bullets in the same incident.