US President Barack Obama says Israel will be better off if it makes peace with Palestinians and realize it cannot permanently occupy the Palestinian lands.

Obama made the remarks in his final address to the United Nations General Assembly at the UN headquarters in New York on Tuesday.

"Surely Israelis and Palestinians will be better off if Palestinians reject incitement and recognize the legitimacy of Israel ... (and if) Israel recognizes that it cannot permanently occupy and settle Palestinian land," Obama said.

Opening the General Assembly session on Tuesday, UN Secretary-General Ban Ki-moon also addressed the Israeli-Palestinian issue.

“As a friend of both the Israeli and Palestinian peoples, it pains me that this past decade has been ten years lost to peace,” Ban said.

“Ten years lost to illegal settlement expansion. Ten years lost to intra-Palestinian divide, growing polarization and hopelessness. This is madness," he said.

The Obama administration recently strongly criticized Israel’s illegal settlement activities, saying they run counter to the advice provided by the Middle East Quartet, a group which includes the United Nations, European Union, Russia and the United States.

The presence and continued expansion of Israeli settlements in occupied Palestine has created a major obstacle for the efforts to establish peace in the Middle East region.

More than half a million Israelis live in over 230 illegal settlement colonies built since Israel’s occupation of the Palestinian territories of the West Bank and East Jerusalem al-Quds.

The United Nations and most countries regard the Israeli settlements as illegal because the territories were captured by Israel in a war in 1967 and are hence subject to the Geneva Conventions, which forbids construction on occupied lands.

Russian Foreign Minister Sergey Lavrov (R) speaks with other diplomats as they listen to US President Barack Obama addressing the UN General Assembly. (Photo by AFP)

Speaking about Russia, Obama said if the country continues to meddle in the affairs of its neighbors that will make its borders less secure.

In his 15-minute speech that covered a wide array of topics, the US leader accused Russia of trying to recover power through force.

"In a world that left the age of empire behind, we see Russia attempting to recover lost glory through force," he said.

In addition, Obama said diplomacy is the only way to end the five-year deadly war in Syria, as a shaky ceasefire brokered by the US and Russia is in danger of falling apart.

"There's no ultimate military victory to be won, we're going to have to pursue the hard work of the diplomacy that aims to stop the violence and deliver aid to those in need," Obama told the General Assembly.

Meanwhile, US Secretary of State John Kerry insisted hopes for a ceasefire remain alive after he held a meeting with Russian Foreign Minister Sergey Lavrov. In his brief remarks to reporters as he left a New York hotel, Kerry said, "The ceasefire is not dead."

Syrian diplomats listen as US President Barack Obama addresses the UN General Assembly. (Photo by AFP)

Addressing the issue of global warming, Obama called on the world to bring the Paris climate agreement into force as soon as possible.

"If we don't act boldly, the bill that could come due will be mass migrations and cities submerged and nations displaced and food supplies decimated and conflicted born of despair," he said.

"There must be a sense of urgency about bringing the agreement into force and helping poorer countries leapfrog destructive forms of energy," he stated.

In December last year, world negotiators adopted the Paris agreement aimed at limiting global temperatures to less than 2C over the next few decades, after two weeks of high-level talks in the French capital, Paris.

Leaders and ministers from nearly 200 countries formally accepted the final draft of the climate deal reached at the World Climate Change Conference 2015 (COP21).