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The chance of peace between Palestine and Israel is in peril because of Jersualem's settlement building, claims US Secretary of State John Kerry.

In a speech today he claimed the two-state solution to the Middle East conflict was in jeopardy and said the United States could not stay silent as violence and Israeli settlement building risked undermining peace.

 John Kerry says peace is hanging by a thread - and Israel is not helping
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John Kerry says peace is hanging by a thread - and Israel is not helpingCredit: EPA

In a speech just weeks before the Obama administration hands over power to President-elect Donald Trump, Kerry said Israel "will never have true peace" with the Arab world if it does not reach an accord based on Israelis and Palestinians living in their own states.

"Despite our best efforts over the years, the two-state solution is now in serious jeopardy," Kerry said at the State Department.

"We cannot, in good conscience, do nothing, and say nothing, when we see the hope of peace slipping away.

 Israeli soldiers clash with Palestinian protesters during a demonstration against Israel's controversial separation barrier in the West Bank
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Israeli soldiers clash with Palestinian protesters during a demonstration against Israel's controversial separation barrier in the West BankCredit: EPA

";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 also condemned Palestinian violence which he said included "hundreds of terrorist attacks in the past year."

But Prime Minister Benjamin Netanyahu said Kerry's Middle East speech was biased against Israel.

In a statement in English issued by the Prime Minister's Office, Netanyahu said: "Like the Security Council resolution that Secretary Kerry advanced in the UN, his speech tonight was skewed against Israel."

 Israel has angrily defended the controversial settlements
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Israel has angrily defended the controversial settlementsCredit: EPA

The Israeli leader said Kerry "obsessively dealt with settlements";, which the United States strongly opposes, in the speech.

Netanyahu accused Kerry of barely touching upon "the root of the conflict - Palestinian opposition to a Jewish state in any boundaries".

Kerry's parting words are unlikely to change anything on the ground between Israel and the Palestinians or salvage the Obama administration's record of failed Middle East peace efforts.

The Israelis are looking past President Barack Obama and expect they will receive more favourable treatment from Trump, who takes office on January 20.

 Israeli Prime Minister Benjamin Netanyahu blasted Kerry's accusations
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Israeli Prime Minister Benjamin Netanyahu blasted Kerry's accusationsCredit: Getty Images

The Republican used his Twitter account on Wednesday to denounce the Obama administration, including its U.N. vote and the nuclear accord it reached with Iran last year.

"We cannot continue to let Israel be treated with such total disdain and disrespect. They used to have a great friend in the US, but not anymore," Trump said in a series of tweets. "Stay strong Israel, January 20th is fast approaching!"

Trump had openly lobbied against the U.N. resolution and would be expected to veto any further ones deemed anti-Israel.

He has vowed to move the US Embassy from Tel Aviv to Jerusalem and has appointed as ambassador a lawyer who raised money for a major Jewish settlement, has cast doubt on the idea of a two-state solution and even advocated for Israel's annexation of the West Bank, a notion even further to the right than Israeli Prime Minister Benjamin Netanyahu's own stance.

Mr Obama, 55, has grown more outspoken about the election result, increasing tensions with the President-elect.

Mr Trump, 70, also blasted his rival over the transition of power.

He said: “Doing my best to disregard many inflammatory President O statements and roadblocks.

Thought it was going to be a smooth transition — NOT!”

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