Maayan Lubell

JERUSALEM (Reuters) - Finance Minister Yair Lapid, whose new centrist party is the second largest in Israel's government, said on Monday thousands of Jewish settlers would have to be removed from occupied land under any peace deal with the Palestinians.

But, echoing Prime Minister Benjamin Netanyahu's position, Lapid said Israel intended to hold onto major settlement blocs in the West Bank when final borders are set in the six-decade-old Israeli-Palestinian conflict.

"It's heartbreaking. We will have to remove tens of thousands, not just from their homes, but from their dreams," he said, speaking at a business conference in Tel Aviv. But, he added: "The settlement blocs will remain in Israel."

Lapid did not say which settlements he felt would need to be evacuated. Some 80 percent of 340,000 settlers in the West Bank live in large clusters near Jerusalem and central Israel.

Lapid's Yesh Atid party soared to a surprising second place finish in the January general election and joined the right-wing Netanyahu's coalition.

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