Settlement program threatens Israel's future: Kerry

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US Secretary of State John Kerry warned Wednesday that Israel's settlement building in the West Bank threatens both hope for peace with the Palestinians and the country's own future as a democracy.

In a major speech setting out his vision of a solution to the conflict, Kerry warned Israel was on a course leading to a "perpetual occupation" of Palestinian-owned land.

"Today, there are a similar number of Jews and Palestinians living between the Jordan River and the Mediterranean Sea," he told an audience of diplomats in Washington.

"They have a choice. They can choose to live together in one state, or they can separate into two states," he said.

"But here is a fundamental reality: if the choice is one state, Israel can either be Jewish or democratic -– it cannot be both -–and it won't ever really be at peace."

Explaining the US decision last week not to veto a UN Security Council vote to condemn Israeli settlement building, Kerry said: "The vote in the UN was about preserving the two-state solution.

"That's what we were standing up for: Israel's future as a Jewish and democratic state, living side by side in peace and security with its neighbors," he said.

"The two-state solution is the only way to achieve a just and lasting peace between Israelis and Palestinians," Kerry said, warning that such a solution was now in "serious jeopardy."