"This is nothing less that a threat to put an end to the state of Israel as a Jewish state, and we categorically reject it," the high-ranking official told AFP on Firday on condition of anonymity.
"Instead of threatening us, Mr. Quraya would be best advised to come back to the negotiations table and start implementing the roadmap," he said.
The internationally drafted peace roadmap, officially endorsed by both sides in June 2003, calls for the establishment of an independent Palestinian state by 2005 but has had very little impact on the ground.
On Thursday night, Quraya slammed Israel's construction of the West Bank separation barrier and said Prime Minister Ariel Sharon's "disengagement" plan could force the Palestinians to shift towards the option of a bi-national state.
That was a reference to threats by Sharon to take unilateral steps toward total separation of Israel from the Palestinians if peace efforts fail.
"Israel's continued policy of building the wall means that talk about a Palestinian state makes no sense," Quraya told reporters, referring to the separation barrier Israel is building to separate itself from the West Bank.
"If this Israeli policy continues, we are going to come back to
the option of a single, bi-national democratic state," he added.