A senior UN official has warned that no solution to the Israeli-Palestinian conflict will be found without international involvement.
No peace without international involvement, Mr Prendergast said
In a briefing to the Security Council, Kieran Prendergast spoke of "a palpable sense of drift and foreboding... towards chaos".
He urged both sides to abandon violence and engage in negotiation.
And he warned that there would be no peaceful agreement if both sides were left to themselves.
Since the start of the latest intifada, or uprising, in September 2000, some 3,839 Palestinians and 979 Israelis had been killed, said Mr Prendergast, the UN Under-Secretary-General for Political Affairs
And an estimated 36,000 Palestinians and 6,297 Israelis had been wounded.
These "staggering" figures, he said, demanded action.
"Are we going to go on like this? Is there not a better way?" he asked.
Neither side, he said, was fulfilling its obligations under the international peace plan known as the road map.
"Even to speak in terms of a peace process seems to put one at a distance from the present reality," he said.
Violence in and around the Gaza Strip has escalated sharply during the past month after Israel launched a major operation in response to a rocket attack from Gaza which killed two Israeli children.
Mr Prendergast said the Palestinian Authority had to make all efforts to stop such attacks against Israeli citizens.
He also called on the Israelis to refrain from the disproportionate use of force.
During the two week long military operation, he said, 114 Palestinians were killed in northern Gaza, many of them civilians, including children.
The conflict is costing lives on both sides
Israel's restrictions on movement in the occupied territories, he said, has affected the United Nations' humanitarian agency for the Palestinians, known as UNWRA.
The agency said in a report released on Friday that Israel's 17-day offensive in the northern Gaza strip had left 700 homeless and caused more than $3m in property damage.
Israel says it destroys buildings which hide tunnels that are used to smuggle weapons into Gaza.
Mr Prendergast said that pessimism about peace prospects was coupled with frustration, because the two state solution enjoyed strong support among both the Israeli and the Palestinian public.