By Susan Cornwell and Jeffrey Heller

WASHINGTON (Reuters) - When Israeli Prime Minister Benjamin Netanyahu addresses Congress on Tuesday, many will be watching to see whether he escalates a war of words with the White House over how to make peace in the Middle East.

Netanyahu has a mostly sympathetic ear in Congress, where few lawmakers in either party speak up for the Palestinians, hewing to decades of close U.S.-Israeli ties.

But the Israeli prime minister has had a rocky relationship with President Barack Obama, and last week said the president's vision of a Palestinian state based on the borders of 1967 could leave Israel "indefensible."

Obama articulated that vision on Thursday in a major policy speech on the Middle East. His position essentially embraced the Palestinians' view that the state they seek in the West Bank and Gaza should largely be drawn along lines that existed before the 1967 war in which Israel captured those territories and East Jerusalem.

On Sunday Obama seemed to ease Israeli anger somewhat when he made clear that the Jewish state would likely be able to negotiate keeping some settlements as part of a land swap in any final deal with the Palestinians.

Netanyahu voiced appreciation for those comments, and some analysts think Netanyahu will not further escalate the quarrel with Obama in his remarks to Congress on Tuesday.

"Netanyahu will most likely try to tone down any perceived differences between his position and the president's, because his disagreements with President Obama have become counterproductive for both and ultimately undermine Israel's own interests," said Haim Malka, of the Center for Strategic and International Studies.

But Republicans in Congress, including House leaders, are not about to drop their criticism of the Democratic president's newly articulated Mideast vision.

House Republican Leader Eric Cantor said Monday that Obama's comments on Middle East borders left "most Americans ... just questioning what kind of strategy there is. It doesn't make sense to force a democratic ally of ours into negotiating with now a terrorist organization" about land swaps.

Cantor was referring to a unity deal last month between Western-backed Palestinian Authority President Mahmoud Abbas' Fatah movement and Hamas, an Islamist group viewed by the United States as a terrorist organization.

Republican Senator Orrin Hatch's office says he will introduce a resolution that it is not U.S. policy to have Israel's borders return to the boundaries of 1967.

ISRAELIS SAY TO EXPECT SOME SURPRISES

Israeli officials said they expected Netanyahu to deliver several "surprises" in his address to Congress on Tuesday, but they declined to elaborate, saying he would likely be working on a final draft up until the last minute.

Speculation had been high in Israel that Netanyahu would offer new ideas on peacemaking to try to display flexibility and rally opposition to the Palestinians' plan to ask the United Nations to recognize a Palestinian state in September.

The official Israeli statement on Netanyahu's speech noted that he is "among the few world leaders, who include Winston Churchill, Nelson Mandela and Yitzhak Rabin, invited to address Congress for a second time."

Netanyahu first addressed a joint meeting of Congress in 1996 during his first term as prime minister.

Netanyahu will speak about recent changes in the Middle East, Iran and the principles for a peace accord between Israel and the Palestinians, the statement said.

Peace talks are frozen, largely over the issue of Israeli settlements in the West Bank. Neither Obama nor Netanyahu have offered a concrete plan to try to revive them.

IMPACT ON U.S. POLITICS

Cantor said he believed most U.S. voters agreed with his criticism of Obama's Middle East policy. "Just responding to the pressure of the Palestinians, and some of their supporters around the world, is not leadership. That's not what people I think in this House and their constituents want to see out of our president."

But Daniel Levy of the New America Foundation in Washington isn't so sure Obama will pay a political price for his comments about Middle East borders, even in the 2012 re-election campaign just ahead.

"There is this perception that there is a huge political price to be paid (for upsetting Israel), which I don't think is borne out in reality," Levy said.

He said Obama had done a good job blunting criticism with his clarifying comments on Sunday, which were made to Washington's most powerful pro-Israel lobbying group, the American Israel Public Affairs Committee.

"I don't think that the extreme positions taken by Congress on this issue -- which are really extreme, often more extreme than Israel's parliament itself -- I don't think they are reflective of American broader public opinion," Levy said.

(Editing by Cynthia Osterman)