U.N. Secretary-General Ban Ki-moon said 2013 would be "a decisive year" for a two-state solution to the Israeli-Palestinian crisis.
Palestinian leaders last year gained more recognition from the U.N. General Assembly. Recently, members of Gaza leadership Hamas and Fatah, which controls the West Bank, agreed to work on reconciliation issues.
Ban, in a statement delivered by Assistant Secretary-General for Political Affairs Oscar Fernandez-Taranco, said the 45-year "occupation" of Palestinian territory was "demeaning."
Israel has faced international criticism for settlement of land considered Palestinian territory. Hamas was blamed for rocket fire on southern Israel this week, the first such incident since conflict abated in November.
"Failure to make tangible progress only means the continuation of suffering, violence and instability in the whole region," Ban said.