US Secretary of State John Kerry has demanded action from defiant Israeli and Palestinian leaders, saying negotiations are at a "critical moment" and they have to choose whether to make peace.

Speaking in Algeria on Thursday after travelling to the Middle East twice in the past 10 days to rescue the negotiations, Kerry said there are limits to what the US administration can do to push the parties together.

His comments came as direct talks appeared near to collapse, with the Israelis and Palestinians accusing each other of failing to honour prior commitments.

Kerry stressed he could not force Israeli Prime Minister Benjamin Netanyahu or Palestinian President Mahmoud Abbas to continue the talks, let alone actually resolve the long-running conflict.

You can facilitate, you can push, you can nudge, but the parties themselves have to make fundamental decisions and compromises

John Kerry, US Secretary of State

"You can facilitate, you can push, you can nudge, but the parties themselves have to make fundamental decisions and compromises,'' he said.

"The leaders have to lead and they have to be able to see a moment when it's there.''

Kerry said he would hold further talks later on Thursday with Netanyahu and Abbas, without elaborating any further details.

"We are urging them to find the compromise that is critical to being able to move forward," Kerry said.

Kerry said both Netanyahu and Abbas have told him they remain committed to the process and noted that Israeli, Palestinian and US negotiators met last night even in the face of the latest difficulties. He said negotiators "worked literally until 4 in the morning ... in an effort to try to move the process forward.''

He said the current disagreements were over "process'' rather than "the fundamental substance of a final status agreement.''

If the two sides cannot find a way to continue talking, Kerry said, "it would be a tragedy for both of them'.' 

Faltering talks

Kerry has spent much of the last two weeks frantically trying to keep the talks from breaking down. He saw Netanyahu in Israel on Monday and Abbas last week in Jordan, but cancelled a return trip on Wednesday after the Palestinians said they would seek greater United Nations recognition over Israeli objections. Abbas announced the move after Israel refused to release a group of Palestinian prisoners it had earlier agreed to free.

Both actions run counter to the agreement the two sides reached last year to negotiate a settlement by the end of April.

Despite eight months of talks, there have been few, if any, tangible signs of progress.

Confronted with the deadlock, Kerry and his team have incrementally lowered the bar for success of the talks from a comprehensive peace deal to a framework for an agreement and are now trying merely to keep the two sides talking beyond the initial target date.

Source: Agencies