Outgoing US Secretary of State John Kerry laid out parameters for a two-state solution to the Israeli-Palestinian conflict during a speech in Washington on Wednesday, saying the US could not stay silent while Israel continues to build illegal settlements.

"Despite our best efforts over the years, the two-state solution is now in serious jeopardy," he said. "We cannot, in good conscience, do nothing, and say nothing, when we see the hope of peace slipping away."

Kerry's remarks come just weeks before the Obama administration hands over power to President-elect Donald Trump, who on Wednesday reiterated his support for Israel over the settlement issue.

Kerry also attempted to answer to Israel's fury over Washington's decision last week not to veto a UN resolution demanding an end to Israeli settlements, which are considered illegal under international law.

Kerry's final endeavor

Kerry warned that expanding settlements in the West Bank and east Jerusalem was leading to an "irreversible one-state reality."

He added that it was happening despite polls showing that most Israelis support the creation of a separate Palestinian state.

"The truth is that trends on the ground - violence, terrorism, incitement, settlement expansion and the seemingly endless occupation - are destroying hopes for peace on both sides and increasingly cementing an irreversible one-state reality that most people do not actually want," Kerry said.

Washington's most senior diplomat reiterated that despite recent differences in policy, the US continued to be Israel's closest ally.

In response, Israeli Prime Minister Benjamin Netanyahu said Kerry's speech had been "deeply disappointing" and "anti-Israel." 

Netanyahu went on to say that Israel was looking forward to working with Trump "to mitigate the damage this resolution has done and ultimately repeal it."

One of his ministers earlier dismissed Kerry's remarks as "pathetic" and "anti-democratic."

Public Security Minister Gilad Erdan told Israel's Army Radio that the Obama administration was attempting to tie Trump to positions that are difficult to change.

Erdan insisted that the Middle East had become more chaotic under Obama, especially in Syria and Iraq.

More than 130 Israeli settlements, built on lands occupied by Israel since 1967, currently house around 630,000 Jewish people. The settlements remain one of the more vexing issues between Israelis and Palestinians.

Abbas 'ready to resume peace talks'

Palestinian President Mahmoud Abbas welcomed Kerry's remarks, saying he was convinced peace was still achievable but only if Israel halts its settlement building.

Abbas also said last week's UN resolution would underpin any future negotiations. "The minute the Israeli government agrees to cease all settlement activities... the Palestinian leadership stands ready to resume permanent status negotiations on the basis of international law and relevant international legality resolutions ... under a specified time frame," he said in a statement.

The last round of US-backed peace negotiations between Israel and Palestine broke down in 2014, with President Barack Obama blaming both sides for the collapse in talks.

German Foreign Minister Frank-Walter Steinmeier also welcomed Kerry's speech, rebuking any attacks directed by the Israeli government. 

Germany's top diplomat said his US counterpart's speech served as both a "warning" and a "call to action."

"It was a warning that a two-state solution cannot be allowed to become an empty phrase, and a call for both sides to take the necessary steps towards fostering such a two-state solution," he said. 

Speaking out against Netanyahu's criticisms, the foreign minister also praised his "friend" John Kerry for "working tirelessly since becoming secretary of state to foster a peaceful solution to the Israeli-Palestinian conflict."

New settlements approved

On Wednesday, despite attempts to delay a local housing committee from approving plans to build 492 new homes in annexed east Jerusalem, the construction was later given the go-ahead, a local non-profit organization said.

For his part in a worsening row, Trump took to Twitter ahead of Kerry's speech on Wednesday to say: "Stay strong Israel, January 20th is fast approaching!" referring to his upcoming inauguration.

The businessman said Obama had treated Israel with "total disdain and disrespect," adding that "they used to have a great friend in the US, but not anymore."

Netanyahu praised Trump for his support in a tweet, thanking him for his "warm friendship and...clear-cut support for Israel."

Trump's pick for ambassador to Israel, David Friedman, opposes a two-state solution to the Israel-Palestinian situation and has publicly stated that Israel's settlement activity is not illegal.

mm, dm/cmk (AFP, AP)