New York  - Israeli and Palestinian officials traded accusations over who was to blame for the failure to achieve peace in the region, during a United Nations Security Council meeting on the Middle East on Friday.

Palestinian President Mahmoud Abbas said Israel's continued settlement activities in the West Bank were both an "obstacle" to creating a viable Palestinian state and severely hampering an ongoing peace process between the two sides. His call for Israel to freeze settlement activity was echoed by France, Britain, China and others.

Israel's UN ambassador Gabriela Shalev denied that Israeli settlements were the main obstacle to peace in the region and criticized the council for ignoring the threats posed by the radical Islamic group Hamas, which controls the Gaza Strip, and the repeated threats against Israel from Iran.

US Secretary of State Condoleezza Rice said the United States was still working hard towards finding a peace deal. President George W Bush hosted a Middle East conference in Annapolis, Maryland in November where both sides pledged to reach a deal by the end of this year.

Rice angrily chided the 15-nation council for not condemning Iranian President Mahmoud Ahmadinejad's fresh threats against Israel made during a speech before the UN General Assembly earlier this week.

"When this council decides what really needs to be taken up as a threat to international peace and security, that to me makes the top of the list," Rice told the council.

"The United States will be asking the council to convene again to take up the matter of one member of the United Nations calling for the destruction of another member of the United Nations in a way that simply should not be allowed, if you pardon my saying so in polite company," Rice said.

Arab League Secretary General Amr Mussa told reporters that Israeli settlements made the prospects of achieving a two-state solution "very difficult, if not impossible."

The ongoing settlement activity "has killed Annapolis," Mussa said. (dpa)