Kerry suggests Israeli housing announcement triggered impasse

However, State Department spokeswoman Jen Psaki said Kerry was not seeking to blame Israel for the impasse in the talks, which appear close to breaking down ahead of the April 29 date by which Kerry had hoped to reach a peace agreement.

Any hint that the United States was blaming Israel was likely to upset Israeli officials. Both sides are sensitive to suggestions that they are at fault for the talks unraveling and they typically try to shift responsibility to the other side.

Testifying before Congress, Kerry said both sides had taken "unhelpful" steps in recent days and that he hoped they would find a way to resume serious negotiations, noting that they held a lengthy meeting on Monday.

Among the steps were Israel's failure to release a fourth batch of Palestinian prisoners as promised, its announcement of tenders to build 708 new housing units in East Jerusalem, which the Palestinians want as the capital of a Palestinian state, and the Palestinians signing 15 international agreements, including the Geneva Conventions on the conduct of war, last week.

U.S. Secretary of State John Kerry talks before the Senate Foreign Relations Committee while on Capitol Hill in Washington, April 8, 2014.

"Both sides, whether advertently or inadvertently wound up in positions where things happened that were unhelpful," Kerry told the Senate Foreign Relations Committee.

"Unfortunately, the (Palestinian) prisoners weren't released on the Saturday they were supposed to be released, and - and so day (one) went by, day two went by, day three went by, and then in the afternoon, when they were about to maybe get there, 700 settlement units were announced in Jerusalem, and poof, that was sort of the moment," he said.

"My hope is the parties will find a way back. We're working with them to try to do so, but they have to ... make that fundamental decision, and I hope they will," he said.

"The ... bitter irony is that at this particular moment, this fight is over process, it's not over the substance of the final status agreement, it's over how do you get to the discussion of the final status agreement," Kerry said.

The main issues in the conflict are borders, security, the fate of Palestinian refugees and the status of Jerusalem.

Kerry last week scrapped plans to visit Jerusalem for talks with the parties and said he was returning home for a "reality check" on what might be possible, saying it could not be an open-ended process. He made the point more baldly on Tuesday.

"There are limits to the time the president and I ... can commit to this, given the rest of the agenda, if they're not prepared to commit to actually be there in a serious way," he said. "So, we'll see what happens in the next days."