JERUSALEM, Oct 22 (Reuters) - Israel needs good ties with the United States to survive and must be more understanding of US demands over securing peace with the Palestinians, Israeli President Shimon Peres said in remarks aired on Friday.

Peres, Israel's elder statesman, said an end to the Palestinian conflict would improve the United States' own security position in the Middle East and help isolate Iran.

His comments came as a diplomatic deadlock deepened over Prime Minister Benjamin Netanyahu's refusal to bow to demands from Washington to extend a freeze on West Bank settlement building so peace negotiations with the Palestinians can resume.

We fought alone, but we cannot exist alone. For our existence we need the friendship of the United States of America. It doesn't sound easy, but this is the truth, Peres said in a speech to Jewish leaders broadcast by Israel Radio.

As the United States is trying to understand the security needs of Israel, we Israelis ourselves must understand the security needs of the United States, he said, speaking in English in an address made on Thursday evening.

In our own small way we can be of help, and of help means (to) enable an anti-Iranian coalition in the Middle East. And the contribution will not be by a declaration, but if we will stop the secondary conflict between us and the Palestinians.

Washington, which often sides with the Israelis in key diplomatic forums and underwrites their military, has been trying to rein in the nuclear aspirations of Israel's arch-foe, Iran, through tougher international sanctions. Yet some Arab powers have publicly chafed at that campaign, pointing to the Palestinians' stalled drive to achieve independence on land Israel occupied in a 1967 Middle East war.

US leaders in recent months have connected the need for peace with the Palestinans to US security interests, blaming the continued tensions for fuelling Islamist militancy.

As head of state, ex-premier Peres lacks executive powers but is often a bellwether of opinion among left-leaning Israelis who oppose the rightist Netanyahu government's policymaking.