Tel Aviv, Feb 14 (IANS): Israeli Prime Minister Benjamin Netanyahu on Sunday said the country has resolved its differences with the European Union after three-months of diplomatic tensions over the bloc's decision to label West Bank settlement exports.

Netanyahu told the cabinet that he and the EU's Foreign Policy Chief Federica Mogherini spoke on the phone during the weekend, Xinhua news agency reported.

"Israel and the EU have agreed to put relations between us back on track," he said.

Netanyahu noted the decision was made after Mogherini assured him the EU objects boycotts on Israel and that the labelling of settlement products will not be mandatory.

In a statement released on Mogherini's behalf on Friday, she reiterated the EU's commitment to a two-state solution to the Israeli-Palestinian conflict, adding that the final borders of Israel and the future Palestinian state should "be settled in direct negotiations between the parties".

On November 29, 2015, Israel suspended contacts with the EU on diplomatic relations regarding the peace process with the Palestinians, following the 28-country bloc's decision to label products from Jewish settlements in territories occupied by Israel as such.