The UN Security Council has begun consultations on an application by Palestinian leader Mahmoud Abbas for full state membership of the UN.
The request needs the support of nine of the 15 members of the council, but the US has said it will veto the bid.
Diplomats say it could take weeks before the issue comes to a vote.
Mr Abbas last week urged the council in New York to back a state with pre-1967 borders. Israel reiterated its call for peace talks without preconditions.
The Security Council is expected to refer the Palestinian request to a special committee - which includes all 15 council members - which will examine it and make a recommendation.
The Palestinian envoy to the UN, Riyad Mansour, said two-thirds of the General Assembly members supported a Palestinian state.
"We hope the Security Council will synchronise itself with this moment of history and allow Palestine to become a member at the United Nations," he said.
Direct talks between Israel and the Palestinians stalled in September 2010.
The Palestinians walked out in protest at the building of Jewish settlements in the occupied West Bank.
In his speech at the UN, Mr Netanyahu said that the core of the conflict was not settlements, but the refusal of the Palestinians to recognise Israel as a Jewish state.
Mr Abbas received a hero's welcome upon his return to the West Bank from New York on Sunday.
He reiterated before a cheering crowd his refusal to talk to Israel without a freeze of Jewish settlements.
"We stressed to everyone that we want to achieve our rights through peaceful ways, through negotiations but not just any negotiations," he told thousands of people gathered at his Ramallah headquarters.
"We will only agree with international law as a basis for negotiations, and a complete halt to settlement activity."
Meanwhile, Israeli Prime Minister Benjamin Netanyahu again called the Palestinians to agree to talks without preconditions.
"You're never going to end negotiations unless you begin it," he told the BBC.
"If we keep negotiating about the negotiations - which is what we've been doing for two-and-a-half years - we're not going to get very far."
Last week, the Quartet of mediators - the US, the UN, the European Union and Russia - called on Israel and the Palestinians to resume peace talks within one month and aim for a deal by the end of 2012.