France has issued an ultimatum to Israel, saying it will recognise a Palestinian state if a renewed push for a two-state solution fails.

The French foreign minister, Laurent Fabius, announced on Friday that France was trying to convene an international peace summit to renew diplomatic efforts by Israel and the Palestinians. He said that if diplomacy failed, France would formally recognise a Palestinian state.

Speaking at a conference of French diplomats in Paris, Fabius said: “Unfortunately, Israeli settlement construction continues. We must not let the two-state solution unravel. It is our responsibility as a permanent member of the UN security council.”

The Palestinians have welcomed France’s renewed efforts to negotiate a two-state solution at talks that are expected to include leaders from the US, Europe and Arab nations. The chief Palestinian negotiator, Saeb Erekat, said any agreement would require full cessation of Israeli settlement activities within a “specified timeframe”.

Israel has rejected the French drive toward a peace initiative. A senior official said Fabius’s threat to recognise a Palestine state was counter-productive. “There is no logic in a deadline for recognition of a Palestinian state, it will only encourage the Palestinians not to negotiate,” he said.

In April 2014, efforts led by the US – particularly the secretary of state, John Kerry – to broker peace between Israel and the Palestinian territories collapsed. No serious plans to resume talks have been made since.

In December 2014, France supported a UN security council resolution creating a framework for a final resolution of the Israel-Palestinian conflict. Those efforts failed due to opposition from Israel and the US on one hand, and an unwillingness by the Palestinians on the other to compromise on the wording of the decision.

Last year France suggested creating an international support group for peace talks. The group met on the sidelines of the UN last year, but without Israelis of Palestinians. Since that meeting Fabius has pushed for the UN security council to condemn Israeli settlements, but this also failed.