Lack of progress in the Mid-East peace process is "beginning to erode" faith that a two-state solution is possible, Palestinian leader Mahmoud Abbas said.
Mr Abbas also told a Washington think-tank that the Palestinians' main demand was to end the blockade of Gaza.
Israel is under strong international pressure following a deadly raid on ships trying to break the blockade.
Mr Abbas has been on a visit to Washington which has included talks with President Barack Obama.
"I would like to express some concern that the situation is extremely difficult," Mr Abbas told the Brookings Institution.
"The hope for a two-state solution, Palestine... living side-by-side in peace with the state of Israel, this concept is starting to erode and I fear that the world is starting to distrust that we are able to reach this solution."
Mr Abbas described Israel's "attack" on the aid convoy in international waters as "unlawful, unacceptable".
"Our main demand is how to end the blockade on Gaza and I believe the entire world stands with us," he said.
Mr Abbas is due to hold more talks with senior US officials on Thursday, including White House National Security Adviser James Jones.
On Friday he is due to meet US Secretary of State Hillary Clinton before returning to the Middle East.
After Wednesday's meeting at the White House, Mr Obama said the situation in Gaza was "unsustainable" and promised $400m (£274m) in new aid for the territory.
But he urged both Israel and the Palestinians to make concessions and return to stalled peace talks.
"Not only is the status quo with respect to Gaza unsustainable, but the status quo with respect to the Middle East is unsustainable," he said.
"It is time for us to go ahead, move forward on a two-state solution."
Israel says its blockade of Gaza is needed to deter attacks by militants from the Hamas movement, which runs the territory.
Nine activists died when Israeli commandos stormed a Turkish passenger ship which was part of an aid flotilla heading for Gaza on 31 May.
In another development on Thursday, the Palestinian Authority postponed local elections due to be held in the West Bank next month.
No reason was given for the decision, made during a cabinet meeting in Ramallah.
Hamas had already said it would boycott the vote.