The Palestinian Authority is threatening to resume its attempt to gain recognition of a Palestinian state at the UN if Israel does not agree to freeze all settlement activity.
The ultimatum was delivered by Palestinian President Mahmoud Abbas at a meeting of the Arab League on Sunday and in a letter to Prime Minister Benjamin Netanyahu.
It is a de facto recognition of the fact that the talks that took place between Israel and the PA in Jordan last month have failed.
While the Israeli government has unofficially offered a limited settlement freeze in order to further the talks, Mr Abbas accused Mr Netanyahu of not agreeing to make any confidence-building gestures and ruled out anything but a complete freeze, an Israeli commitment to holding talks on a two-state solution based on the 1967 borders and the release of 130 long-serving Palestinian prisoners.
The attempt by the Palestinians to gain recognition of an independent state at the UN last year failed following intense diplomatic pressure from Israel and the US.