The former Foreign Secretary has claimed that the biggest diplomatic failure of the last four decades is the fact that the two state solution has not yet materialised.
David Miliband, addressing guest at OneVoice's gala dinner in London on Tuesday, said
"The failure to establish a Palestinian state next to Israel is the greatest diplomatic failure in 40 years," he said. "It's the greatest diplomatic failure because, actually, it is one of those international problems to which there is actually a viable solution."
Mr Miliband, who praised the work of peace group OneVoice, expressed disappointment that by 2008 "any notion that there was an inevitability about a two-state solution had disappeared, but more than that, it was no longer fashionable to be talking about a two-state solution in the Middle East".
He added: "In respect to that small piece of land at the heart of the Middle East, I do think my opinion and that of the majority of Israelis and Palestinians, which is that you need two states able to live side by side with each other, is the right answer.
"It is the greatest failure of diplomacy because diplomacy has failed to bring it about, and there is suffering and injustice and insecurity on both sides as a result."
He said a two state solution was necessary now more than ever, because the dominant agenda in Israel was not resolution with the Palestinians, but dealing with the threat from Iran.
"The Palestinian Spring has not yet sprung and it's for those reasons this cause, this cause that I think is vital to the state of Israel and vital to the people of Palestine, has fallen to being fourth or fifth on the regional agenda," he said.
The Labour MP expressed his belief that the "Israel-Palestine question will only ever be settled in the context of a wider Arab settlement with Israel".
"The whole world is more unjust and less safe as a result of our failure in the Middle East, but it is also my conviction that the peoples of the Middle East have some remarkable strengths.
"If only the strengths that we know exist amongst both Israelis and Palestinians could be mobilised in common cause, then the future of the Middle East will not be the bloodletting mistrust that has typified so much of the past."
Mr Miliband was joined at the event by the Archbishop of Canterbury.