US Secretary of State John Kerry believes sketching the borders of a future Palestinian state and agreeing to security arrangements for Israel will be "essential" if peace talks resume, the top US negotiator has said.

In his first public comments since negotiations collapsed last month, Martin Indyk candidly described the behind-the-scenes atmosphere between Israelis and Palestinians and voiced hopes the talks would resume soon.

Speaking late Thursday at the Washington Institute for Near East Policy think tank, Indyk said although the two sides both showed "flexibility" it was clear they "do not feel the pressing need to make the gut-wrenching compromises necessary to achieve peace."

In the end despite nine months of "serious and intensive negotiations," Indyk said it was "easier for the Palestinians to sign conventions and appeal to international bodies in their supposed pursuit of justice.

"It is easier for Israeli politicians to avoid tension in the governing coalition and for the Israeli people to maintain the current comfortable status quo," said Indyk, a former US ambassador to Israel.

"If we, the US, are the only party that has a sense of urgency, these negotiations will not succeed."

Should the peace talks resume however, Kerry believes both sides must work on the future contours of a Palestinian state and security arrangements for Israel alongside the other core issues such as refugees and Jerusalem.

Indyk pointed to "unprecedented" work by General John Allen on how to secure Israel's security, as well as a willingness by the Palestinian president Mahmud Abbas to put the security of a future Palestinian state in US hands to overcome Israeli distrust.

"Once a border is agreed each party would be free to build in its own state," Indyk argued, highlighting the tensions caused during the past months by announcements of Israeli plans for more than 12,800 new settlements in the occupied West Bank and east Jerusalem.

- Settlements used 'to sabotage' talks-

The top US negotiator, who spent hours locked in rooms pouring over documents, voiced concern that the settlement movement could one day "drive Israel into an irreversible binational reality."

A "binational" state -- as opposed to a two-state solution -- would enshrine the current status quo in which Jews and Arabs live in one state, with many demographers predicting that in only a few years the number of Palestinians will surpass the Jewish population.

"Rampant settlement activity -- especially in the midst of negotiations -- doesn't just undermine Palestinian trust in the purpose of the negotiations; it can undermine Israel's Jewish future," Indyk warned.

"If this continues, it could mortally wound the idea of Israel as a Jewish state -- and that would be a tragedy of historic proportions."

The announcement of new settlements had accompanied each tranche of prisoner releases during the past nine months and "had a dramatically damaging impact on the negotiations," Indyk said.

"By the way, it was intended to have that damaging effect," he added, saying supporters of the settlers used such activity as "a way of sabotaging the negotiations."

Abbas was increasingly "humiliated by false Israeli claims that he had agreed to increased settlement activity" in return for the prisoner releases, and as the talks went on "he shut down."

"It wasn't the only reason he shut down," Indyk said, answering questions after his speech, "but it was the major reason that he shut down toward the end of last year."

Some Israeli officials, however, reacted angrily to Indyk's comments, with deputy minister Ofir Akunis, a leading hawk from Israeli Prime Minister Benjamin Netanyhau's Likud party saying: "I regret that Palestinian lying also influences our friends."

"There are not two truths, only one," he wrote on his Facebook page. "The Palestinians torpedoed the negotiations when they agreed on reconciliation with (militant group) Hamas and when they made unilateral requests to the United Nations."

Indyk insisted however that, despite moments of frustration and humiliation felt by both sides, he had also seen "moments of genuine camaraderie and engagement... to find a settlement to these vexing challenges."