Israeli Economy Minister Naftali Bennett said that the idea of a Palestinian state was at a "dead-end", prompting the Palestinians to accuse him of sounding the death knell of a two-state solution.
Bennett's comments are entirely in line with those that he espoused during January's election campaign but his reiteration of them as minister comes as Washington steps up efforts to revive the troubled peace process.
"The idea that a Palestinian state will be founded within the Land of Israel has reached a dead end," said Bennett, using the biblical term for a greater Israel encompassing the occupied West Bank.
"Never, in the history of Israel, have so many people put so much energy into something so pointless," he said during a meeting of Jewish settlement leaders, in remarks carried by public radio.
"The most important thing for the Land of Israel is to build, and build, and build," said Bennett, who heads the hardline nationalist Jewish Home party.
He added that central to the problem was the reluctance of Israel's leadership to simply insist that the West Bank belongs to "the people of Israel".
"There was never a Palestinian state here, and we were never occupiers, this is our home," said Bennett.
Bennett, who is a past chairman of the settlement leaders' council he was addressing, has consistently opposed the two-state solution backed by key Israeli ally Washington and the rest of the international community.
He says he opted to join Prime Minister Benjamin Netanyahu's coalition -- whose platform includes a declared aspiration to reach an agreement leading to a Palestinian state -- because he believed the goal was not realistic.
Bennett's remarks come after Deputy Defence Minister Danny Danon, a member of Netanyahu's rightwing Likud party, denied in an interview earlier this month that the government was serious about reaching a peace agreement that would lead to a two-state solution.
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Following Danon's interview, Netanyahu last Sunday reiterated his commitment to a Palestinian state, saying he and US Secretary of State John Kerry will "try to make progress to find the opening for negotiations with the Palestinians, with the goal of reaching an agreement".
Kerry was to visit the region last week for the fifth time since taking office in February, but postponed, citing the need to focus on the more than two-year conflict in Syria.
Palestinian negotiator Saeb Erakat reacted angrily to Bennett's comments.
Several senior Israeli officials had attacked "the internationally endorsed two-state solution on the 1967 borders", he said in a statement.
"These are not isolated events but a reaffirmation of political platforms and radical beliefs," he added.
"Israel has officially declared the death of the two-state solution."
Erakat blamed Netanyahu for matching such statements in policy, and said the "Israeli government is determined to make Kerry's efforts fail."
Nabil Abu Rudeina, spokesman for Palestinian president Mahmud Abbas, "called the Israeli government to clarify its position on the economy minister's statements".
"These statements are not only a message to the administration of US President Barack Obama who made constant efforts to revive the peace process, but also a challenge and clear rejection of all efforts to try and save what can be," the Palestinian WAFA news agency quoted him as saying.
In Israel meanwhile, former US president Bill Clinton, speaking at an event in honour of President Shimon Peres, backed the idea of a Palestinian state.
"I'm with Shimon on this, I don't think that in all these years a credible alternative to the creation of a Palestinian state has been presented," he said.