Britain has said that continued Israeli settlement expansion into the occupied Palestinian territories has driven hopes for a two-state solution to near death.
British foreign secretary William Hague, speaking as Israelis took to the polls on Tuesday, warned the Israeli government that their actions were costing international support.
"I hope that whatever Israeli government emerges... that it will recognise that we are approaching the last chance to bring about such a solution," Hague told parliament.
"I condemn recent Israeli decisions to expand settlements. I speak regularly to Israeli leaders stressing our profound concern that Israel's settlement policy is losing it the support of the international community and will make a two-state solution impossible," he said.
Asked whether the European Union should tie trade with Israel to progress on peace talks, Hague said the bloc still had work to do, in conjunction with the United States, to establish "incentives and disincentives" regarding further negotiations.
"There is a clock ticking with potentially disastrous consequences for the peace process," he added.
Opinion polls predict that Binyamin Netanyahu, the current prime minister, will return to power at the head of a coalition dominated by religious and nationalist pro-settler parties.
US-backed negotiations have been frozen since 2010 over Palestinian objections to continued settlement construction. Netanyahu has demanded that the Palestinians return to talks without preconditions.
Hague called 2013 a crucial year for the peace process given the Israeli elections and the start of the second term of US president Barack Obama. "If we do not make progress in the coming year, people will increasingly conclude that a two-state solution has become impossible," said Hague.
Both Israelis and Palestinians should return to talks without preconditions, he said.
Hague said he would make peace talks and efforts towards a two-state solution - the basis of a US-backed peace process for almost 20 years - "top of the agenda" during a planned visit to Washington next week.