The Israeli prime minister, Binyamin Netanyahu, on Sunday brushed off a warning by the US secretary of state, John Kerry, that Israel faces a growing boycott threat if peace talks with the Palestinians fail, saying the campaign would not achieve its goal.

In the latest flare-up between the two allies, two of Netanyahu's cabinet ministers went even further, accusing Kerry of undermining the Jewish state's legitimacy and the chances of reaching a peace agreement.

Israel and the Palestinians launched peace talks in July after a long lull and have thus far shown little signs of progress. Facing an April deadline, Israel is working against a backdrop of increasing international pressure to reach a deal, coupled with a growing call for boycotting Israel over its settlements in areas it captured in the 1967 Middle East war.

A small but growing number of European businesses and pension funds have begun to drop investments or limit trade with Israeli firms involved in the West Bank settlements. At a security conference in Germany this weekend, Kerry warned that a breakdown in Israeli-Palestinian talks would accelerate this trend and could threaten Israel's economic prosperity and its safety.

"You see for Israel there's an increasing delegitimisation campaign that has been building up. People are very sensitive to it. There are talk of boycotts and other kinds of things," Kerry said. "Today's status quo absolutely, to a certainty, I promise you 100%, cannot be maintained. It's not sustainable. It's illusionary. There's a momentary prosperity, there's a momentary peace."

At the opening of his weekly cabinet meeting, Netanyahu said international pressure on Israel would backfire and only cause the Palestinians to harden their positions.

"Attempts to impose a boycott on the State of Israel are immoral and unjust. Moreover, they will not achieve their goal," he said.

While Netanyahu refrained from taking aim at Kerry, some of his ministers were harsher. The intelligence minister, Yuval Steinitz, of Netanyahu's ruling Likud party, called Kerry's comments "offensive, unfair and insufferable".

"You can't expect the state of Israel to conduct negotiations with a gun pointed to its head," he said.

The economics minister, Naftali Bennett, from the religious, pro-settler Jewish Home party, said all "the advice givers" should know that Israel will not abandon its land because of economic threats.



"We expect our friends around the world to stand beside us, against anti-semitic boycott efforts targeting Israel, and not for them to be their amplifier," said Bennett, a fierce critic of the Kerry-led talks. "Only security will bring economic stability, he said.

Tzipi Livni, Israel's chief negotiator, came to Kerry's defence, saying he was merely expressing concern for Israel's future.

Aiming to clarify, State Department spokeswoman, Jen Psaki, said Kerry's only reference to a boycott was a description of actions undertaken by others that he has always opposed.

"Secretary Kerry has a proud record of over three decades of steadfast support for Israel's security and wellbeing, including staunch opposition to boycotts," Psaki said in a statement. "Secretary Kerry has always expected opposition and difficult moments in the process, but he also expects all parties to accurately portray his record and statements."

Over the past six months, Kerry has held back-and-forth talks with Israeli and Palestinian leaders in hopes of reaching a framework for a peace agreement. He is expected to present his ideas in the coming weeks and both sides have balked at some of his expected proposals.