The UN's special coordinator for the Middle East peace process on Wednesday accused the Jewish Home party, a member of the governing coalition, of "killing hope" for a peace treaty with the Palestinian Authority.
Nickolay Mladenov spoke after a minister from the Jewish Home party, which holds several portfolios in Netanyahu's government, declared the party would never support a two-state solution.
"The determination of some ministers in Israel to block progress and kill hope by promoting illegal settlements and rejecting a Palestinian state is concerning," he said in a statement to AFP.
Netanyahu this week brought former Foreign Minister Avigdor Liberman and his Yisrael Beytenu party into the ruling coalition, naming him as Defense Minister.
The choice of Liberman to oversee Israeli policy in Judea and Samaria raised concern among some foreign leaders, but in his first speech he took a conciliatory tone – committing himself to the two-state solution along with Netanyahu.
In response, Jewish Home said it would oppose any attempt at a two-state solution.
"As long as we are in the government, there will be no Palestinian state, there will be no settlement evacuations and we will not give any land to our enemies," Justice Minister Ayelet Shaked said on Tuesday, quoted in Israeli media.
Mladenov said the comments were particularly concerning as they came "a day after encouraging signs by the Prime Minister".
Netanyahu had also said that an Arab League-endorsed peace initiative dating to 2002 "includes positive elements that can help revive constructive negotiations with the Palestinians".
On Friday, in a French-led peace initiative, representatives from 30 countries and international organizations are due to meet in Paris to discuss a potential action plan.
AFP contributed to this report