@pankaj nema
First of all this is a Israeli Arab problem. You yourself mentioned that Jews came to the Palestine Mandate around the 1940s. The fact of the matter is that Jews were in a majority in some areas and Jerusalem had 60% Jews even before they arrived. And this was despite the fact that this area was under Ottoman rule for 500 years. Jerusalem having a Jewish majority for 500 years would not be possible if Muslims showed hostility to Jews. In fact, while there were regular progroms and holocaust of Jews in Europe, you will find no similar cases against Jews in Muslim lands. Even in India, Baghdadi and Persian Jews were able to get important positions under Mughal and other Muslim rulers.
On the other hand, it was Christians AND Muslims Arabs in majority in areas like West Bank, Gaza and East Jerusalem.
Now the solution that is accepted by all member states of the UN across the world, the US a close Israeli ally, the OIC and the Arab League as well as past Israeli PMs from David Ben Gurion, to Rabin to Olmert has been the two state solution.
Again, let me reiterate that OIC and Arab League have endorsed the Saudi led plan that they will not only recognize Israel but establish full diplomatic and trade relations with it upon the implementation of the two state solution. This is what
REAL world diplomacy is about, not fanatasy blogs about "Islamofascists".
http://en.wikipedia.org/wiki/Arab_Peace_Initiative
Another point of difference about real world diplomacy and Internet blogs, nation states don't make their decisions based on religious reasons most of the time. Otherwise, you wouldn't have a Israel-GCC-US alliance of sorts against Iran. During the Cold war, you would not have had a Turkey-Iran-Israel trilateral intelligence co-operation to keep Arab leftists and nationalist in check and established. And you wouldn't have soon to be Pakistani dictator Zia-ul-Haq leading a Pakistani battalion in Jordan killing 20,000 Palestinians in the Black September incident. Or taking confiscated Israeli Palestinians weapons from Israel to fight the anti-Soviet "Jihad" in Afghanistan. I can go on but these are enought to ponder upon.
Even Israeli lobby groups from ADL to J Street support the two state solution. Even Bibi Netanyahu spoke about the two state solution.
Obama welcomes Netanyahu's two-state speech - Israel News, Ynetnews
Where do you want the Palestinians who have lived in these lands for thousands of years and number in the millions and include both Muslims AND Christians to go? Why are you sticking to minority, ultra fanatical view point of NOT accepting the two solution?
Jews have the right to their state in the Jewish majority region, and the Arabs - both Muslims and Christians should have the right to their own state in the Arab majority regions. Forget about humanity, this is in Israels' interest after all if it wants to continue to be a democratic Jewish majority state. A large number of Jews all around the world support this two state solution as well along with the rest of the worlds public opinion. Now you can't call all the 187 countries in the world "Islamofascist" as well for supporting a two state solution.