JERUSALEM, Aug 23 (Reuters) - Israeli and Palestinian leaders sparred on Monday over Jewish settlements and Israeli calls for security guarantees before the launch of Quartet-sponsored direct peace talks in Washington next week.

Israeli Prime Minister Benjamin Netanyahu said in a statement he would demand any Palestinian state established under a peace deal be demilitarised. But he said he was not laying down any terms for the talks set to convene on Sept. 2.

Netanyahu's spokesman Nir Hefez said his statement was a response to remarks made by Palestinian negotiator Saeb Erekat at a news conference in the West Bank city of Ramallah earlier on Monday.

Erekat had accused Israel of seeking to set terms for the negotiations sponsored by the Quartet of the United States, United Nations, European Union and Russia, which will be the first time the sides have held direct talks in nearly two years.

Palestinians were asking for a full settlement freeze and for Israel to extend a partial hiatus in construction set to expire late in September, Erekat said. If any building continued we cannot continue the negotiations, he said.

Hefez made no reference to the settlements, whose constituents were already lobbying Netanyahu's right-wing governing coalition for renewing construction. The enclaves are built in land occupied since the 1967 Middle East War and the international community deems them illegal.

Netanyahu ordered a 10-month partial freeze last November in response to Western demands to help create a climate for the Middle East talks to resume. He has not said whether he would permit new construction once peace talks get under way.

The settlements are a big issue for Palestinians who see their spread as depriving them of land they need to build a territorially contiguous state in the West Bank.

Israel is not setting any pre-conditions for the opening of direct talks, Hefez said in his statement.

Netanyahu justly emphasises the importance of (setting) firm security arrangements and demilitarisation as part of any peace deal to prevent any attacks being launched from the West Bank on its citizens, Hefez added.

Netanyahu told his cabinet on Sunday he thought it would be difficult but possible for the talks being renewed to succeed.

He has previously proposed a demilitarised Palestinian state with Israeli forces deployed along its eastern border with Jordan, and has said that the future of Jewish settlements and other core issues may be raised in negotiations.