The UK's reputation was damaged when the government hesitated in calling for an immediate end to the Lebanon war last year, MPs have said.
An immediate ceasefire call could have saved lives, MPs say
At the time, then-PM Tony Blair was criticised for waiting a few weeks before eventually calling for a ceasefire between Israel and Lebanon.
The foreign affairs committee also said it was "counterproductive" not to talk to Palestinian militant group Hamas.
The Foreign Office said it had not ruled out contact with Hamas.
The committee said the government should "urgently" engage with moderate elements, but the Foreign Office said it was ready to respond if there was any "significant movement" from Hamas.
Despite criticism of Mr Blair's policies, the committee welcomed his appointment as a Middle East envoy.
He took up the post of envoy for the Quartet, comprising the EU, UN, Russia and US, when he resigned as British prime minister in June.
However, the committee, in its report entitled Global Security: The Middle East, said a quicker response from the government in July last year "could have led to reduced casualties amongst both Israeli and Lebanese civilians whilst still working towards a long-term solution to the crisis".
It called some of Israel's military actions in Lebanon during the war "indiscriminate and disproportionate".
It particularly highlighted the attacks on United Nations observers and the dropping of more than 3.5 million cluster bombs (90% of the total) in the 72 hours after the UN Security Council passed the resolution which effectively ended the war.
The MPs criticised the government's decision "not to speak to Hamas" as "counterproductive".
The stance, also taken by the Quartet, followed the creation of a unity government between Palestinian factions Fatah and Hamas in February.
"A national unity government could and should have been established much earlier than the spring of 2007," the MPs said.
"Given the failure of the boycott to deliver results, the government should urgently consider ways of engaging politically with moderate elements within Hamas as a way of encouraging it to meet the three Quartet principles."
These are non-violence, recognition of Israel and acceptance of previous agreements and obligations.
Israel, the US and EU consider Hamas a terrorist organisation and say they will not deal with it directly until it renounces violence and recognises Israel.
A Foreign Office spokesman said the UK had worked "strenuously" to secure a ceasefire in Lebanon and had made clear its concerns to Israel about the civilian impact of its military action.
He added: "We have not said that we will never talk to Hamas but there have to be some ground rules.
"That's what the Quartet principles aim to provide and they are no more than was demanded of the PLO in the 1990s as the essential basis for progress," a Foreign Office spokesman said.
The committee called on the government to engage with moderate Hezbollah parliamentarians.
This should happen, it added, even though the influence of Hezbollah's military wing, "along with Iran's and Syria's, continues to be a malign one".
The committee also described the Middle East "roadmap" as "largely...an irrelevance in the dynamic of the Arab-Israeli conflict".
In its report, it said: "The unwillingness of the Quartet to challenge robustly the failure by both sides to meet their obligations has undermined its usefulness as a vehicle for peace."
But it did endorse the "failed" road map's objectives of "an independent, democratic and viable Palestinian state peacefully co-existing with a secure Israel and an end to the occupation that began in 1967".
Mike Gapes, the Labour MP who chairs the committee, said: "We think this is a very dangerous situation.
"Progress needs to be made rapidly towards a solution in this conflict and, of course, Israel has to be secure and with internationally recognised borders."
He told BBC Radio 4's Today programme that he hoped Mr Blair's record on the Middle East could see the former prime minister become "like Richard Nixon going to China".
"He is in a position where he could actually take some initiative to begin a process.
"But that requires the Quartet to give him a stronger mandate than he has currently got."