Israeli PM Benjamin Netanyahu says his country will retaliate if the Palestinians take further unilateral steps in pursuit of statehood.
He told a weekly cabinet meeting that Israel would not continue peace talks with the Palestinians at any price.
Palestinian leader Mahmoud Abbas has applied to 15 UN conventions, accusing Israel of backtracking on its promises.
US envoy Martin Indyk is to meet both sides on Sunday to try to breathe new life into the embattled peace process.
Earlier this week, Israel cancelled plans to free hundreds of Palestinian prisoners, arguing that Mr Abbas's decision to sign up to several international conventions at the UN had violated the conditions for the release.
The Palestinians however say that Israel had already reneged on a commitment to free the prisoners.
US frustration
On Sunday, Mr Netanyahu said the Palestinians would "achieve a state only through direct negotiations and not through empty proclamations or unilateral moves".
"Unilateral steps on their part will be answered with unilateral steps on our side," he said. "We are willing to continue negotiations, but we will not do so at any price."
Mr Netanyahu did not spell out what action Israel may take.
The top US official overseeing the negotiations, Secretary of State John Kerry, warned last week that there were limits to the time and effort Washington could afford to expend on the process.
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