US Secretary of State Hillary Clinton said Wednesday there was "no substitute for face-to-face discussion" to resolve the Israeli-Palestinian conflict.

Speaking at a Washington dinner for advocacy group the American Task Force on Palestine, Clinton said negotiations were "the only path that will lead to the fulfillment of the Palestinian national aspiration."

Clinton reiterated the US administration for a two-state solution, which she said was critical for Israel's long-term future and to end "The indignity of occupation" for Palestinians.

Direct talks were relaunched in Washington last month, but reached an impasse over Israel's refusal to extend restrictions on settlement building on Palestinian land. The Arab League has given talks a one-month deadline to resolve the deadlock before pursuing other means of establishing a Palestinian state.

PLO official Ahmad Qrei'a said Monday that Palestinians would consider going to the UN Security Council to declare a Palestinian state. If that failed, he said, "let us declare a Palestinian state and seek an international mandate."

Clinton said state-building efforts must be pursued alongside negotiations. Praising Palestinian Authority Prime Minister Salam Fayyad's two-year plan to build a state, which she said was "going beyond rhetoric and actually building a new reality," Clinton called on the broader international community, "including many Arab states," to provide more financial support to realize a Palestinian state.

On Wednesday, US State Department Spokesman Phillip Crowley said reports that the US administration had asked regional leaders to pause negotiations until after US mid-term elections to avoid a diplomatic setback for US President Barack Obama were "nonsense."

"We’re doing what we can, not on a political timetable in this country but to gain an agreement on comprehensive peace that ends the conflict once and for all," he said.

Clinton condemns Nablus arson

Addressing the American Palestinian diaspora, the Secretary of State expressed the US government's "strong condemnation" of an arson attack on a school near Nablus on Wednesday and said she hoped for "a swift investigation."

"There is never any justification for violence against civilians, and an attack against a school is particularly outrageous. These incidents cannot be tolerated."

The school's headmistress reported that settlers wrote racist slogans on the school's walls, including "regards from the hilltops." On Tuesday, an Israeli rights group reported that 90 percent of claims filed against settlers in the West Bank for assault to person or property against Palestinians fail to secure a conviction.