New Zealand Foreign Minister Murray McCully is singling out Israel, blaming it for undermining the Middle East Peace Process.
In an address to the Lowy Institute in Sydney yesterday, Mr McCully said the viability of the two-state solution between Israel and Palestine was vanishing because of Israel's settlement activity.
Mr McCully said the United Nations Security Council needed to act.
"It has been seven years since the council has even passed a resolution on this question," Mr McCully said in his speech.
"We keep being told that 'the time is not right' and 'the parties are not ready'.
"But while we wait, the situation on the ground gets worse, violence has escalated, and the viability of the two-state solution is disappearing as a consequence of Israeli settlement activity.
"This question now looms as a serious challenge to the credibility of the council," he said.
Mr McCully also confirmed New Zealand had put on hold the draft UN Security Council resolution it circulated on the matter last October.
New Zealand's resolution called on Israel to stop building settlements in the occupied territories and for Palestinians to stop taking cases to the International Criminal Court.
"Faced with the reality that a resolution would not succeed we agreed to wait."
However, Mr McCully said, since then, the situation on the ground had deteriorated and the settlement activity continued.
"As an elected member of the council, we have a responsibility to make contributions.
"So we are again looking at draft text for a resolution, and we are talking to parties more closely engaged in the issue to encourage them to act.
"For the council to do nothing while the scope for a two-state solution is completely undermined would be a total abrogation of its responsibilities."
Israel's ambassador to New Zealand, Yosef Livne, told Morning Report blaming Israel for derailing the peace process would not be an accurate description of the situation.
"We don't think it describes the matter quite as it is. You forget about issues like terrorism, like incitement, like the lack of willingness of the Palestinian Authority to meet with us."
New Zealand's draft resolution had called for both sides to refrain from provocative gestures and not to demonise each other with hostile rhetoric.
New Zealand argued at the time that the stalemate between Israelis and Palestinians was unsustainable.
However, both Israeli and Palestinian leaders criticised the draft.