Israeli Prime Minister Benjamin Netanyahu has condemned the European Union’s “crazy” approach to dealing with his country.

His comments, made during a closed-session meeting in the Hungarian capital Budapest, were accidentally broadcast to reporters.

He said the EU was the only major power to attach “political” conditions to its relationship with Israel.

This, he said, was damaging to the bloc’s security and economic interests.

The EU has repeatedly condemned Israel’s building of Jewish settlements in the occupied West Bank.

In comments picked up on the headphones of reporters waiting outside the meeting, Mr Netanyahu told the prime ministers of Hungary, the Czech Republic, Poland and Slovakia: “The European Union is the only association of countries in the world that conditions the relations with Israel… on political conditions. The only ones.”

He was referring to the EU’s insistence on terms relating to the Israeli-Palestinian peace process being included in its Association Agreement with Israel, signed in 2000 and not subsequently updated.

“It’s crazy. It’s actually crazy,” he said. "It’s not about my interest. I’m talking about Europe’s interest.

“We have a special relationship with China. And they don’t care. They don’t care about the political issues.”

He added that India and Russia had a similar approach, and urged the four prime ministers to push for a deal on a new Association Agreement.

“There is no logic here. The EU is undermining its security by undermining Israel. Europe is undermining its progress by undermining its connection with Israeli innovation by a crazy attempt to create conditions.”

He added: "I think Europe has to decide if it wants to live and thrive or if it wants to shrivel and disappear.

“I am not very politically correct. I know that’s a shock to some of you. It’s a joke. But the truth is the truth. Both about Europe’s security and Europe’s economic future. Both of these concerns mandate a different policy toward Israel.”