US Secretary of State Hillary Clinton has expressed frustration at the latest setback to Israeli-Palestinian peace talks, but insists the United States will continue to push for progress.
Direct talks were set up with great fanfare by President Barack Obama.
But earlier this week, the US abandoned efforts to persuade Israel to stop new construction of Jewish settlements.
Mrs Clinton has vowed to promote indirect talks on what she calls core issues including borders, settlements, refugees and Jerusalem.
The BBC reports peace talks between Israel and the Palestinians resumed in September after a break of almost two years.
But they were suspended after Israel decided not to extend a 10-month freeze on settlement building in the West Bank.
Ms Clinton said the time had come to "grapple with the core issues of this conflict: on borders and security, settlements, water and refugees and on Jerusalem itself."
The BBC reports she was making her first comments on the deadlock since Washington said it had abandoned efforts to persuade Israel to stop the construction of new settlements.
Last month, the Obama administration offered Israel a number of incentives, including jet fighters and security guarantees, in return for a 90-day extension of the moratorium on settlement-building.
Prime Minister Benjamin Netanyahu offered to renew the freeze if the Palestinians recognised Israel as a Jewish state, but the Palestinian Authority dismissed the idea.