WASHINGTON, May 20 (Reuters) - Israeli Prime Minister Benjamin Netanyahu said on Friday he was prepared to make compromises to peace but he rejected President Barack Obama's proposal that Israel return to its 1967 borders.

Obama and Netanyahu met at the White House a day after the U.S. president endorsed a longstanding Palestinian demand on the borders for their future state.

In remarks to reporters in the Oval Office, Obama said he had reiterated the principles he had laid out on Thursday.

Both men acknowledged differences between their positions.

Obama said the United States and Israel had an extraordinary bond. Netanyahu said he and Obama could still work together for peace. (Reporting by Matt Spetalnick, writing by Jeff Mason)