Israel's Prime Minister Benjamin Netanyahu appears to being walking back from a controversial election pledge never to allow a Palestinian state after the US said it would be forced to "re-evaluate" its approach to the long-running conflict and criticized the "divisive rhetoric" of his election campaign.

Speaking to US television channel MSNBC on Thurday evening Netanyahu said: "I don't want a one-state solution. I want a peaceful, sustainable two-state solution." The prime minister, whose Likud party secured a surprise victory on Tuesday after lagging behind in the polls for weeks before the election, told the interviewer: "I have not changed my policy."

Yet just days before, in an interview with Israeli news site NRG, the prime minister said: "Anyone who moves to establish a Palestinian state and evacuate territory gives territory away to radical Islamist attacks against Israel." The statement was a dramatic about-turn on his famous 2009 "Bar Ilan" speech in which Netanyahu pledged his commitment to a two-state solution.

Lagging behind by as many as four seats in the final polls before Thursday's election Netanyahu went on the offensive in the final 72 hours of his campaign in a bid to desperately claw back votes from the far right. The move catapulted the prime minster's Likud party from second place in the final polls to a clear seven-seat lead in Wednesday's election, but the victory looks like it will come at significant cost both domestically and internationally.

During the final hours of his election campaign, as well as dismissing a two-state solution, the prime minister also appeared to pledge to continue building settlements in the holy city beyond 1967 lines. "If Jews cannot build in Jerusalem where can they build?" he told the crowd at the demo to applause. At a right-wing rally in Tel Aviv, just under 36 hours before polls opened, Netanyahu warned supporters that he was the only one who could "keep Jerusalem united"

On polling day itself, Netanyahu's Likud party sent out a barrage of SMS messages to Israeli cellphones telling supporters to "get out their houses" and "go vote" because Arabs were being "bussed" to polling stations in "droves." The messages have attracted widespread criticism both inside Israel and abroad for being racist.

White House Spokesperson Josh Earnest said of the warnings: "Rhetoric that seeks to marginalize one segment of their population is deeply concerning and it is divisive, and I can tell you that these are views the administration intends to communicate directly to the Israelis."

Responding to Netanyahu's earlier dismissal of a two-state solution, Earnest said that the US would "re-evaluate our approach and our path forward in the situation."

"It has been the policy of the United States for more than 20 years that a two-state solution is the goal of resolving the conflict between the Israelis and Palestinians," he told reporters, adding that that position had not changed.

Relations between Netanyahu and the White House soured dramatically earlier this month when the Israeli Prime Minister took the stand in Congress to deliver a speech on the Iranian threat. The Washington trip, organized by the Republicans, was not coordinated with the Obama administration, which saw the speech as a bid to derail ongoing negotiations over Tehran's nuclear programme. The US president did not attend the address.

Despite Netanyahu's apparent dismissal of a two-state solution in the eleventh hour of his election campaign the United Nations said that it expected the new Israeli government to continue the peace process and resume talks aimed at establishing a Palestinian state. The last round of negotiations collapsed in April 2014.

Commenting on Netanyahu's dramatic re-election, Saeb Erekat, the chief Palestinian negotiator, called the result "dangerous" and said that the Israeli electorate had chosen "settlements, racism and apartheid."

"Such a result would not have been possible had the international community held Israel to account for its systematic violations of international law," he added.

On Thursday night, even as Netanyahu seemed to flip-flop on his pre-election disavowal of a two-state solution, Erekat ridiculed the possibility of continuing a peace process with Netanyahu's government. "If he says that he will stop settlement activities, I'll go see him now. Now. In his house. I've been there before. I've known him for 31 years," he told reporters in Jerusalem.

The Palestinian negotiator also said that the PLO was pushing ahead with plans to end security cooperation with Israel announced before the election. Although the Palestinian Authority has threatened to end security ties before, Erak said this time it was serious. "It's not going back, it's not playing games," he said.

Speaking on the condition of anonymity, a Palestinian official told VICE News that he expected the official announcement of a halt of security cooperation to made in the next two weeks to a month. It will "definitely" halt cooperation on arrests in West Bank, he said, although he conceded that sharing of intelligence would likely continue since the "Jordanians will share it with the Israelis anyway."

According to a report released by Peace Now in February — a left-wing Israeli lobby group -— construction of illegal settlements in the occupied West Bank has reached a 10-year high, with ground broken on 3,100 homes in 2014 alone.