The government in the West Bank is largely ready to govern a Palestinian state, the United Nations has said.
The Palestinian Authority (PA) has successfully built some institutions and public services required for a future state, the UN said in a report.
But it warned that the PA's efforts could only go so far without resolving its conflict with Israel and the division with the Hamas-run Gaza Strip.
The report comes a day ahead of a meeting of Western donors in Brussels.
"In six areas where the UN is most engaged, governmental functions are now sufficient for a functioning government of a state," said the report released by Robert Serry, the UN special co-ordinator for the Middle East peace process (Unsco).
It says the Palestinian Authority - which has limited self-rule government in the West Bank - has built up areas such as governance, rule of law, health and social services, and infrastructure up to a level expected of a state.
The PA has set itself a September deadline to be ready for statehood, with the hope of pressuring the international community to recognise a Palestinian state on all of the territory Israel occupied in 1967, including Gaza - over which PA President Mahmoud Abbas has no control.
Hamas - which governs Gaza - rejects any deal that recognises Israel.
Israel has warned that any unilateral moves to secure statehood are not a substitute for a peace treaty that would establish a Palestinian state by mutual consent.
Peace talks between Israel and the Palestinians have been on hold since late 2010 over the issue of Jewish settlement in the occupied West Bank and East Jerusalem.