Israel's insistence on Palestinian recognition of its Jewish character and the Palestinian refusal to comply is threatening bring about the collapse of US-led peace talks.

The Palestinians recognised the state of Israel at the start of the peace process in the early 1990s, but Israeli Prime Minister Benjamin Netanyahu has insisted they recognise its religious character and give up on the "right of return" of Palestinian refugees.

"I will not accept an agreement that does not cancel the right of return and which does not include Palestinian recognition of the Jewish state," Netanyahu said Tuesday.

"In light of the latest statements by the Palestinians, we are getting further away from an agreement."

His remarks were made a day after Palestinian president Mahmud Abbas reiterated his refusal to recognise the "Jewishness" of Israel in a speech to the Revolutionary Council of his Fatah party, echoing a similar statement over the weekend by the Arab League.

US Secretary of State John Kerry is facing an uphill battle to keep peace talks on track beyond an April 29 deadline, with the negotiations waylaid over several key issues, including the question of recognition.

Abbas, who will meet US President Barack Obama at the White House on March 17, reassured delegates on Monday that at the age of 79 he wasn't going to "back down on his people's rights or betray their cause."

But Netanyahu has placed the recognition dispute at the forefront of the talks, describing Arab rejection of the Jewish state as the "root of the conflict."

For the Palestinians, accepting Israel as a Jewish state would mean accepting the Nakba, or "catastrophe," that befell them when 760,000 of their people fled or were forced out of their homes in the war that accompanied Israel's establishment in 1948.

They also recall the Palestinian leadership recognised "the right of the State of Israel to exist in peace and security" in 1993 at the start of the Oslo peace process.

The demand to recognise Israel as Jewish was not made of Egypt or Jordan, the only two Arab countries to have signed a peace treaty with Israel.

- 'Down Palestinian throats' -

Israel is also divided over the matter, with President Shimon Peres reportedly saying the demand was "unnecessary" and could risk derailing the negotiations.

Earlier this week, David Landau, former editor-in-chief of Haaretz newspaper, chided Netanyahu for trying to force his version of Zionism "down Palestinian throats".

"Many Israelis and Palestinians believe that Netanyahu's broaching of the 'Jewish state' issue was intended deliberately to slow the negotiations or thwart an agreement," he wrote in a column in his former newspaper.

Writing in the same paper, Ari Shavit said the Palestinians would never give up on their demand for the right of return as the Nakba was "the experience that moulded them".

"Because it is actually impossible to demand from the Palestinians that they change... it is required to demand they recognise this: that the Jewish people is a people of this land, and did not arrive here from Mars.. that the Jews are not colonialists but legal neighbours."

Washington has accepted Israel's demand that Palestinian recognition of a Jewish state be written into any deal, and such a clause is understood to be part of Kerry's framework proposal for extending the talks beyond April.

"The United States believes a lasting peace will involve two states -- Israel as a Jewish and a democratic state and the state of Palestine," White House spokesman Jay Carney said Tuesday.

"It is our hope that the prime minister and president Abbas can reach past any remaining differences and arrive at a framework that moves the process forward towards peace," Carney said, noting the "incredibly difficult and complex issues" facing both leaders.

But in order for the deadline to be extended, both Israel and the Palestinians have to first accept the framework proposal -- and without a formula to satisfy both sides, it looks unlikely to happen.