"Stalemate can lead to a Palestinian state that would be forced on us -- not as the outcome of negotiations that represent the Israeli interest," Justice Minister Tzipi Livni, who heads Israel's negotiators at peace talks, told a meeting of the World Jewish Congress in Jerusalem.
"When there is no peace process, there is no legitimacy to act in order to keep Israel's security. So stalemate is against Israel's security needs," she said in a recording released by organisers.
"I believe in the peace process not as a favour to Europe or to the United States of America. It is our own interest," she said.
Livni added that while Israel has a strong military, continued US support was also vital for the Jewish state.
"Security is guaranteed by more than just militaries. Our security is also guaranteed by our relationship with the USA," Livni's spokeswoman quoted her as telling the congress.
US Secretary of State John Kerry, who in July nudged the Israelis and Palestinians into resuming talks frozen since September 2010, was on Wednesday meeting Israeli Prime Minister Benjamin Netanyahu in Rome, according to officials, to discuss Iran, Syria and the talks with the Palestinians.
The talks were due to run for seven hours, Israeli media said.
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A Palestinian official said on Tuesday that negotiators from the two sides held a new round of peace talks in Jerusalem the day before, focusing on the issue of water resources.
Monday's session was attended by Livni and Palestinian negotiators Mohammed Shtayeh and Saeb Erakat, the official said.
The official did not give further details, but the question of water rights is one of the core issues that must be settled in any peace deal.
Israel controls most of the underground water resources in the West Bank, and the Palestinians want a more equitable share of them.
Kerry said on Monday that negotiations, which take place under an American-imposed media blackout, have "intensified."
Speaking in Paris, Kerry said that since the end of July, 13 direct meetings had taken place, including three in the past four days.
"The pace has intensified, all the core issues are on the table and they have been meeting with increased intensity," Kerry said.
"It is no secret to anybody that this is and remains a difficult process, there is no shortage of passionate sceptics," he added.