The US has vowed to continue to push for a Palestinian state, but admits a hardline campaign stand by Israeli Prime Minister Benjamin Netanyahu has forced a re-evaluation of its strategy.
Netanyahu's election victory on Wednesday was met coolly by the White House, which left Secretary of State John Kerry the job of phoning the Israeli leader to congratulate him - taking a break from talks on a controversial Iran nuclear deal to do so.
US President Barack Obama would call "in the coming days", the White House said.
"It was a brief phone call," State Department spokeswoman Jen Psaki said, refusing to characterise it as a "warm" conversation amid frosty relations between Netanyahu and the Obama administration.
US officials stressed Washington would not be swayed from its official policy that any Israeli-Palestinian peace deal should result in two states living side-by-side.
In the final days of his campaign, Netanyahu deepened the discord with the Obama administration by pledging there would be no Palestinian state on his watch, and promising to build thousands more settlements in east Jerusalem.
"It continues to be the view of the president that a two-state solution is the best way to address" tensions with the Palestinians, White House spokesman Josh Earnest said.
He also castigated Netanyahu's Likud party for sharp rhetoric "that seeks to marginalise Arab-Israeli citizens" after the prime minister urged supporters to the polls warning "Arab voters are coming out in droves".
Psaki added "only a two-state solution that results in a secure Israel alongside a sovereign and independent Palestine can bring lasting peace and stability to both peoples".
But she acknowledged that, given Netanyahu's campaign pledges, the administration "will be evaluating our approach with regard to how best to achieve a two-state solution".
Relations between Israel and its traditionally staunch US ally are at a record low, and Netanyahu has a notoriously frosty relationship with Obama.
The Israeli leader's dramatic appearance this month before the US Congress to denounce the emerging nuclear deal with Iran only served to widened the chasm.
Indeed, Obama's Republican rivals were the first American politicians to publicly congratulate Netanyahu.
"Congratulations to Prime Minister Netanyahu on his re-election. He's a true leader who will continue to keep Israel strong and secure," said Jeb Bush, a probable Republican frontrunner in the 2016 presidential race.
A new crisis in US-Israeli relations might be only days away. The deadline for a framework deal with Iran is March 31, and the very next day on April 1 the Palestinians will formally join the International Criminal Court.
The Palestinian Authority plans on its first day to seek action against alleged Israeli war crimes in Gaza and settlement activity.
Israel has already cut off millions of dollars of taxes due to the Palestinians in retaliation for joining the ICC, exacerbating a financial crisis for the cash-strapped body.
The Palestinians are increasingly finding it hard to pay their bills, including to security forces, crucial to ongoing co-operation with Israeli forces.
"Without this co-operation, we may be looking at the possibility of widespread violence in the West Bank, something that should trouble all of us," Sachs said.
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