Israeli hardline economy minister Naftali Bennett has indirectly accused John Kerry of Jew-blaming and encouraging global terror for his comments linking the Islamic State (Isis) crisis in Syria and Iraq to the Israeli-Palestinian conflict.

The US Secretary of State had suggested that reaching a peaceful solution to the 'Mother of all conflicts' - as the Israeli-Palestinian conflict is called - should be put against the bigger picture of the struggle against Islamic extremism in the Middle East.

In the course of discussions with leaders in the region about the Islamic State emergency, Kerry said that the topic of the Israeli-Palestinian peace talks always came up spontaneously "because it was a cause of recruitment and of street anger and agitation".

"And people need to understand the connection of that... It has something to do with humiliation and denial and absence of dignity, and Eid celebrates the opposite of all of that," he said, referring to the Islamic festivity of Eid.

However, Bennett, who is a Israeli far-right figurehead with a clear pro-settler agenda and youthful image that appeals to both young Israelis and ultra-Orthodox Jews, criticized Kerry's remarks saying that "there is no justifying terror, only fighting it", according to Haaretz.

"It turns out as well that when a British Muslim decapitates a British Christian, there will always be someone to blame the Jew," he said. "To say that the Israeli-Palestinian conflict is strengthening the Islamic State is encouraging global terror."

"These are terrorists who want to control the entire Middle East from Syria to Jordan and Lebanon, and to re-establish an Islamic caliphate," he said. "You can either fight this or explain this. The choice is in the world's hands, and it will bear the consequences."

Bennett, who served in one of the Israel Defense Force's elite fighting units before founding a software company, is popular for his outspoken and radical remarks. The settlement champion was criticized for saying in 2013 that he "killed lots of Arabs in my life - and there's no problem with that".