What Does "True Israel" Mean?

I heard a pastor recently speak on how the church is now the True Israel. What did he mean by "True Israel" and is he correct?

I am always cautious to criticize a local pastor but unfortunately he is wrong. What he was teaching is called Replacement Theology (also known as supercessionism) - the idea that the "Church" replaced Israel and the Jewish people as God's Chosen People. And while on the surface it sounds good it ignores the reality of God's unconditional covenant with the Jewish people.

The covenant that God made with Abraham in Genesis 12, 15, 17 (see also parts one and two in Tzedakah Moment's "Whose Land Is It Anyway?") was unique in several ways. First, Abraham had nothing to do with the covenant agreement because God did all the work (Genesis 15). Secondly, while there are many covenants found in Scripture this is one of the few that has no conditions to it. Israel and the Jewish people broke promises to God (i.e., Deuteronomy 29 and 30) and they were punished for their disobedience. However, the eternality of their chosen nature is unconditional because they did nothing to deserve it and they could do nothing to keep it. An excellent theological article on this subject is Craig Blaising's "The Future of Israel as a Theological Question" in the September 2001 issue of the Journal of the Evangelical Theological Society. A book which masterfully defeats the idea of replacement theology but, unfortunately, hedges on the importance of Jewish evangelism is The God of Israel and Christian Theology by R. Kendall Soulen.