Update 7.36pm: Palestine's president Mahmoud Abbas has said he is ready to resume Middle East peace talks if Israel freezes its construction of settlements.
Earlier, Israeli Prime Minister Benjamin Netanyahu's offic denounced US secretary of state John Kerry's speech on the Middle East, saying it was "skewed against Israel" and "obsessively" focused on Israeli settlements.
Mr Netanyahu's office said the speech "barely touched upon the root of the conflict - Palestinian opposition to a Jewish state in any boundaries".
We cannot continue to let Israel be treated with such total disdain and disrespect. They used to have a great friend in the U.S., but.......— Donald J. Trump (@realDonaldTrump) December 28, 2016
not anymore. The beginning of the end was the horrible Iran deal, and now this (U.N.)! Stay strong Israel, January 20th is fast approaching!— Donald J. Trump (@realDonaldTrump) December 28, 2016
US secretary of state John Kerry has said that if Israel rejects a two-state solution for peace with the Palestinian people, "it can be Jewish, or it can be democratic".
Mr Kerry spoke in response to Israeli criticism of America's abstention from a UN vote condemning Israeli settlement construction.
He reiterated the American position that a two-state solution giving both Israelis and Palestinians a home state provides the best roadmap to peace.
Mr Kerry also made it clear that despite recent differences in policy, the US continues to be Israel's closest ally.
Israel has been furious at the US since the UN vote late last week.
In his farewell speech at the US state department, Mr Kerry that the vote was "in keeping with" American values for democracy.
Mr Kerry said expanding Israeli settlements in the West Bank and east Jerusalem are leading to an "irreversible one-state reality".
This is happening despite polls showing that most Israelis support the creation of a separate Palestinian state, he added.
Mr Kerry's farewell speech comes days after the US declined to veto a United Nations Security Council resolution which called Israeli settlements a violation of international law.
He said most people in Israel do not know how systematic the settlement process has become in recent years, with tens of thousands of Israelis moving into the middle of Palestinian territories.