NEW YORK, July 7 (Reuters) - Israeli Prime Minister Benjamin Netanyahu said on Wednesday he was prepared to discuss right away the future of Jewish settlements if Palestinians entered direct peace talks with Israel.

Asked on CNN's Larry King Live if he would extend beyond September a 10-month moratorium on housing starts in settlements in the occupied West Bank, Netanyahu said it was time for the Palestinians to drop preconditions for face-to-face talks.

Let's just get into the talks and one of the things we'll discuss right away is this issue of settlements and that's what I propose doing, he said.

Netanyahu was interviewed a day after a fence-mending meeting with President Barack Obama at the White House, where the Israeli leader repeated a call for a restart of peace negotiations with Palestinian President Mahmoud Abbas.

Direct talks on Palestinian statehood have been suspended since late 2008. Obama's Middle East mediator, George Mitchell, has been shuttling between Netanyahu and Abbas in so-called proximity talks.

The Palestinians insist on keeping Israel at arm's length until it makes certain things clear -- namely, what size and shape of Palestinian state is Netanyahu prepared to consider, and will its Jordan Valley be free of Israeli troops?

Earlier on Wednesday, Netanyahu said on ABC television's Good Morning America that Israel was prepared to take additional steps to ease Palestinian movement in the West Bank to coax Abbas into direct peace talks.

The point is, we are prepared to do them. But what we want to see finally is one thing: We want President Abbas to grasp my hand ... to shake it, sit down and negotiate a final settlement of peace between Israel and the Palestinians, he said. (Reporting by Jeffrey Heller; Editing by Paul Simao)