US Secretary of State John Kerry's nine-month effort to broker an Israeli-Palestinian peace deal formally collapsed this week, with no revival on the horizon because each side appears firmly entrenched in its positions.

Kerry said Thursday it was time for Washington to "pause, take a hard look at these things, and find out what is possible and what is not possible in the days ahead."

He was speaking two days after the expiration of a Tuesday deadline by which the sides had committed themselves to seek a peace deal.

But the talks had already unraveled last week when Israel suspended them after Hamas, which is sworn to the Jewish state's destruction, and president Mahmud Abbas's Palestine Liberation Organisation (PLO), dominated by the Fatah movement, reached a reconciliation deal.

Despite that, Abbas has said he would be ready to resume dialogue if a discussion on borders was a top priority, along with a settlement freeze.

But Israel says it will only return to the table if Abbas renounces the pact with Hamas.

"Either Hamas disavows the destruction of Israel and embraces peace and denounces terror, or president Abbas renounces Hamas," Israeli Prime Minister Benjamin Netanyahu said this week.

But chief Palestinian negotiator Saeb Erakat said Israel's argument that the talks had collapsed because of the reconciliation deal was "completely disingenuous."

"Netanyahu's government has refused to recognise the 1967 border or even put a map on the table proposing Israel's idea of its final borders," he said in an opinion piece in TIME magazine.

The Hamas-PLO deal gave the sides five weeks to agree on a transitional government which would organise presidential and parliamentary elections.

Palestinian analyst George Giacaman said that deal, alongside a Palestinian diplomatic offensive in the United Nations, were Abbas's trump cards.

"There are five weeks in which to form a government, which will be an indicator of the success of the Palestinian leadership's domestic policy," he said.

Israeli defence analyst Alex Fishman, writing Thursday in the top-selling Yediot Aharonot daily, said Abbas's tactics had plunged the Netanyahu government into "a confused, passive and mainly reactive state."

- Cracks in the foundations -

The stand-off sparked by Palestinian reconciliation was only the latest in a string of disputes.

Netanyahu repeatedly attacked the Palestinians over their refusal to recognise Israel as the Jewish state, which he said proved their lack of sincerity.

On Thursday he pledged to draft a bill "that would provide a constitutional anchor for Israel's status as the national state of the Jewish people."

Major cracks appeared in late March when Israel refused to free a group of veteran Palestinian prisoners, the last batch of an agreed 104, sparking a furious response from Ramallah.

The Palestinians, who had agreed to freeze all moves to seek international recognition in exchange for the staged release of the prisoners, promptly applied to adhere to 15 international conventions and treaties.

Both commitments had been made as a first step towards the reopening of peace negotiations last July 29, in the first direct talks in three years.

At the time, Kerry said "our objective will be to achieve a final status agreement over the course of the next nine months."

For his part, Erakat said: "I'm delighted all issues are on the table and will be resolved without any exceptions."

And his Israeli counterpart, Tzipi Livni, said: "I believe that history is not made by cynics. It is made by realists who are not afraid to dream."

But hopes were quickly ground down on the hard rock of reality, with the Palestinians accusing Israel of slamming the door in their face by ramping up settlement construction, house demolitions and deadly army raids.

Each time Israel released a batch of 26 prisoners, it also announced more settlement construction.

In mid November, Netanyahu was forced to cancel plans to build 20,000 new settler homes after coming under huge international pressure. A month later, the Palestinian negotiating team resigned en masse, in a move never accepted by Abbas.

In the face of persistent setbacks, Washington began preparing its own framework of how to guide the talks past the April deadline until the end of the year, but efforts to secure an extension never came to fruition.