British Foreign Secretary William Hague on Thursday said he was "disappointed" with Israel's decision not to renew its moratorium on West Bank settlement construction after efforts to reach a deal with the United States on the matter were pronounced a failure.

"I am disappointed that Israel has not renewed the freeze on settlement construction and that peace talks are currently on hold. It is Britains longstanding view that settlements are illegal under international law and an obstacle to peace," said Hague.

Open gallery view Settlement construction - AP - Sept 27, 2010 Credit: AP

"There is an urgent need for progress to secure a two state solution, based on 1967 borders, with Jerusalem as the future capital of two states and with a fair settlement for refugees," headed. "This is important for Israelis, for Palestinians and for the international community including the U.K."

Hague said that the British government planned to continue working closely with both the Palestinians and Israelis, as well as with international mediators, to find a solution to the impasse.

"We will continue to work with the United States, the parties to the conflict and with our EU and UN partners to achieve a two state solution. In addition, we will continue to press for an end to all settlement activity," he said.

A day earlier, UN Secretary-General Ban ki-Moon publicly chastised the government of Israel for refusing to extend its ten-month moratorium on construction in the settlements of the West Bank that expired in September, calling it a snub to the international community.

A spokesperson for Ban urged Prime Minister Benjamin Netanyahu's government to renew its freeze on settlement construction in the West Bank and East Jerusalem, framing it as an obligation that Israel is avoiding.

The Secretary-General takes note with regret that Israel will not heed the united call of the international community, as reflected by the Quartet, to extend the settlement restraint policy," the spokesperson said.

"[Secretary-General Ban Ki-moon] reiterates his urging Israel to fulfill its road map obligation to freeze all settlement activity in the occupied Palestinian territory, including East Jerusalem," the spokesperson added.

Negotiations between Israel and the U.S. government regarding Israel's renewal of a moratorium on West Bank settlement construction in exchange for an American letter of guarantees were declared a failure on Tuesday.

A senior U.S. diplomat confirmed Tuesday that Washington was "ending the contacts to try and achieve another [settlement construction] moratorium," but added that Washington would now seek to work toward a deal on security and border issues.

Ban's spokesperson said that despite his disappointment over Israel's refusal to renew the moratorium on settlement construction, the UN Secretary-General was encouraged by the United States government's public commitment to continue its efforts to facilitate negotiations between Israel and the Palestinian Authority.

On his way to Washington, D.C., Defense Minister Ehud Barak will pass through New York City on Thursday for talks with the UN Secretary-General. Barak hopes to assuage fears that Israel's refusal to extend the settlement freeze signals the Netanyahu government's unwillingness to negotiate a permanent-status agreement with the Palestinians in good faith.

Direct peace talks between Israel and the Palestinian Authority have been on hold since Israel's 10-month freeze on new settlements expired at the end of September.

State Department spokesman Philip J. Crowley said Wednesday that the fact Washington was no longer pushing a temporary settlement freeze did not mean it condones continued building, stressing that the United States does not and will not accept Israel's continued West Bank settlement activity.

Speaking to reporters on Wednesday, Crowley reiterated that the fact that the United States no longer considered a settlement freeze as a sufficient condition for continued talks did not mean Washington changed its views toward Israel's settlement activity.

As the United States continues with its attempts to renew talks, Crowley said, U.S. "position on settlements has not and will not change."

"The United States does not accept the legitimacy of continued Israeli settlements, and we will continue to express that position," the State Department spokesman added.