A group of elder statesmen says a new approach is needed for the Middle East peace talks, after failed US efforts to get an extended Israeli settlement ban.
The group, including ex-US President Jimmy Carter, has called Washington's attempt to get a renewed settlement ban in return for big incentives "flawed".
The group, The Elders, said the priority should be an agreement on borders and security.
The US has reverted to indirect talks after Israel refused to extend its ban.
The Palestinians have insisted that before direct talks can progress, Israel must extend its 10-month freeze on Jewish settlement building in the West Bank.
The settlements are illegal under international law, although Israel disputes this.
"We now urge a renewed effort, firmly based in international law and respect for human rights, aimed at defining boundaries between Israel and a new Palestinian state and addressing security issues, without neglecting the other issues at the core of the conflict," the Elders said in a statement.
Otherwise, the possibility of a two-state solution could slip further away, said the group, which was set up by Nelson Mandela in 2007 to tackle world conflicts.
The group said Israel must halt all settlement activity throughout the occupied Palestinian territory, including in East Jerusalem, and lift its "illegal and inhumane" blockade of Gaza.
It also called on Israel to end its occupation of Palestinian land, and to agree the boundaries of a Palestinian state based on 1967 borders with East Jerusalem as its capital. This could include a "one-to-one" land swap to allow for minor adjustments, it added.
Meanwhile, it called on the Palestinian authorities to end all human rights violations against political rivals, and to recognise Israel's right to exist.
Former President Carter's most recent visit to the region was in October, as part of a delegation of the Elders which included former Irish president Mary Robinson and Indian activist Ela Bhatt.
"If there is no real progress, more violence is the likely outcome," the group said.
Direct negotiations between the Israeli and Palestinian leaders resumed in Washington in September after a break of almost two years.
But last week, US Secretary of State Hillary Clinton expressed frustration at the latest setback to Israeli-Palestinian peace talks.
Although US attempts to secure a new Israeli moratorium on settlement building had failed, she insisted that the US would continue to push for progress via indirect talks on "core issues" including borders and security, settlements, refugees and Jerusalem.
Last month the Obama administration offered Israel a sizeable package of incentives, including jet fighters and security guarantees, in return for a 90-day extension of a previous moratorium on settlement-building.
Israeli 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.
US President Barack Obama has identified continued US engagement in peace talks as a key policy goal.
But Palestinian leader Mahmoud Abbas has vowed not to return to the negotiating table while Israel continues building on West Bank settlements.
Israel has occupied the West Bank, including East Jerusalem, since 1967, settling close to 500,000 Jews in more than 120 settlements.