Washington: US Secretary of State John Kerry laid out a proposal for peace agreement between Israel and the Palestinians, less than a month before the Trump administration takes office and at a low point in US-Israeli relations.

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Kerry`s speech was widely seen as an attempt to set the Obama administration`s Middle East policy in stone before the January 20 changeover. President-elect Donald Trump has been vocally supportive of Israel and vowed a change of policy after his inauguration.

"Two-state solution is the only way to achieve a just and lasting peace between the Israelis and Palestinians," Kerry said emphasizing that it was the only way to ensure Israel`s future as a Jewish and democratic state.

Israeli Prime Minister Benjamin Netanyahu has accused Washington of conspiring against his country by not blocking the Egyptian resolution condemning Israeli settlements at the UN Security Council last week. The State Department dismissed the accusation as "just not true".

"The US did in fact vote in accordance with our values," Kerry said. "No American administration has done more for Israel`s security than Barack Obama`s."

Kerry reminded of the amount of military aid Israel has received from the US from Iron Dome to intelligence. "More than half of our entire global foreign military financing goes to Israel," Kerry said.

Kerry said that two-state solution was in danger despite popular support. "Polls of Israelis and Palestinians show there is still strong support for a 2-state solution in theory. They just don`t believe it can happen," Kerry said.