He also supported Palestinian demand that Israel must freeze all settlement construction before peace talks can resume.
Addressing a press with Palestinian President Mahmoud Abbas in the West Bank town of Jericho, Medvedev said: “The Russian position on the Palestinian issue hasn’t changed and remains the same.”
"Russia stated its position on this issue in the 1980s, in the last century, and we fully support the inalienable right of the Palestinian people to the establishment of an independent, united and viable state with East Jerusalem as its capital."
The late Palestinian President Yasser Arafat first issued a declaration of independence at a meeting in Algiers in November 1988, with the former Soviet Union quick to express support for it shortly afterward.
"I'm sure that with the establishment of a Palestinian state, everyone will win — Palestinians and Israelis," Medvedev said on his first-ever visit to the Palestinian territories.
There will be no progress in Middle East peace talks without a "reasonable" Israeli decision on Jewish settlement activity, Medvedev said.
"It is obvious that without some sort of reasonable (Israeli) decision concerning their settlement activity, there will be no progress," the Russian leader said. "It is impossible to close your eyes to this fact."
Abbas described the visit as "historic." "The visit highlights the Russian position, which is eager to see the Palestinians achieve their full rights by establishing an independent state with Jerusalem as its capital," Abbas said.
Palestinian sources said that discussions between Abbas and Medvedev would focus on efforts to revive peace talks.
The Israeli daily Haaretz quoted an Israeli Foreign Ministry official as saying that Russian recognition of a Palestinian state would be a severe blow to Israel that would cause a domino effect on other states including China.
Palestinian negotiator Saeb Erekat said Medvedev's visit to the West Bank came as Abbas asked his UN representative to prepare for presenting a draft resolution against the Jewish settlement.
Early Tuesday, a senior Fatah official said more Latin American countries would announce their recognition of an independent Palestinian state.
Nabil Sha'ath, a member of Fatah's Central Committee, told the Voice of Palestine radio that Paraguay, Peru, Costa Rica and the Dominican Republic are expected to follow in the footsteps of seven other South American countries and announce their support for Palestine.
Sha'ath, also member of the negotiation team with Israel, was referring to the Latin American countries of Guyana, Chile, Ecuador, Bolivia, Brazil, Argentina, and Uruguay.
A Medvedev aide, Sergei Prikhodko, was quoted as saying Russia is still interested in hosting a Mideast peace conference in Moscow, though no dates have been set. Moscow has raised the idea in the past, though to a cool reception by Washington.
The Russian president is not visiting Israel at this time because of a strike by Israeli diplomats.
The ancient town of Jericho was decked out in Russian and Palestinian flags, and black-clad Palestinian troops with assault rifles lining the streets.
Abbas and Medvedev were given a guard of honor at a red-carpet ceremony.
Jericho is one of several semiautonomous Palestinian enclaves within the West Bank, where Israel maintains overall control. Israeli security forces were not visible along the access roads to Jericho on Tuesday.
— with input from agencies
