US Secretary of State John Kerry gestures while addressing a news conference at the foreign ministry in Algiers. Picture: Louafi Larbi

 Algiers - US Secretary of State John Kerry on Thursday demanded action from recalcitrant Israeli and Palestinian leaders, saying negotiations were at a “critical moment” and they had to choose whether to make peace.

Negotiating teams in Jerusalem made progress in overnight talks that stretched until 4.00am (01.00 GMT), but “there is still a gap and that gap needs to close fairly soon,” Kerry said in Algiers at the start of a trip to North Africa.

“You can facilitate, you can push, you can nudge, but the parties themselves have to make fundamental decisions to compromise,” Kerry said.

“The leaders have to lead, and they have to be able to see a moment when it's there,” he added, showing signs of frustration after his months-long peace efforts appeared to be in tatters.

The negotiating teams from the US, Israel and the Palestinians have been trying to chart a path forward after both sides took steps Washington has criticised as “unhelpful”.

“There's an old saying, 'You can lead a horse to water but you can't make it drink,'“ Kerry said at the Algerian foreign ministry.

“Now's the time to drink; the leaders need to know that.”

He added that the United States remained committed to the talks, and said that after the trilateral meeting on Wednesday discussions would continue.

He would hold further talks later Thursday with Israeli Prime Minister Benjamin Netanyahu and with Palestinian president Mahmud Abbas, he said, without elaborating.

“We are urging them to find the compromise that is critical to being able to move forward,” Kerry said.

“The fight right now, the disagreement, is not over the fundamental substance of a final status agreement.

“It's over the process that will get to that and what you need to do in order to be able to continue to negotiate. It would be a tragedy for both of them... For them to lose the opportunity to get to those real issues that are the differences of the final status agreement.” - Sapa-AFP