Security guards blocked the doors to several of the panels at J Street's first annual conference this week – because the rooms were so packed it would have been illegal to let any more people in. A discussion entitled "The need for a regional comprehensive approach to the Arab-Israeli conflict" was so popular that the organisers decided to repeat it. (One of the speakers, Jordanian ambassador Prince Zeid Ra'ad Zeid al-Hussein, remarked that it was the first time in decades of panel participation that he'd been asked for an encore.)

J Street's staff had planned for 1,000 attendees but midway through the conference's first day, they had 1,500, with more arriving. A great many American Jews, attached to Israel but sickened by its government and its knee-jerk American boosters, have been waiting for something like this.

J Street was formed as a liberal alternative to Aipac, the American Israel Public Affairs Committee, whose name is virtually synonymous with America's Israel lobby. In some ways, it's odd that such a group as J Street didn't already exist, and that past attempts to create one failed. After all, American Jews are generally far more liberal than their putative spokespeople, and are largely opposed to the neoconservative foreign policy espoused by the Israel lobby. Some 77% of American Jews voted for Obama. J Street is premised on the idea that, when it comes to the Middle East, there was a huge body of Jewish public opinion without a tribune. The success of the conference suggests it was correct.

Still, there remains a real tension between liberalism and Zionism, and even with the advent of J Street, it's only growing. It is a tension that goes deeper than opposition to Israel's current government. How does a liberal justify the fact that a middle-class American, like me, has the right to become an Israeli citizen tomorrow, but that Arabs refugees born within its borders don't? If you don't believe in biblical claims, or in blood and soil nationalism, what's left is the fact that history has shown the necessity of the Jewish state, and Israel is the only one there is, and that not all political ideals are reconcilable.

Certainly, there's much for a progressive to love in Israel – the vitality of its cities, the richness of its intellectual life, the sheer human achievement of those who created a nation out of a 19th-century ideology. Yet there are contradictions that many liberal Jews see but don't like to talk about. We recoil when people like Pat Buchanan bewail the fact that white Christian Americans are becoming a minority in the United States, but we insist that Jews remain a majority in Israel. We demand to live in a secular state where all races and religions have equal claim on American identity, but no one has yet figured out how Israeli Arabs might enjoy similar rights without dismantling Zionism.

Among younger American Jews, largely spared anti-Semitism and thus the anxiety that they might need to seek refuge in Israel, these contradictions seem especially stark. A 2007 study, co-authored by one of the leading sociologists of American Jewry, found that among non-Orthodox Jews under 35, only 54% are "comfortable with the idea of a Jewish state." American Jews and Israelis are growing apart, their values ever more divergent.

To plenty of people on the left, and not only on the left, there's an easy solution to the Israel dilemma: a single, bi-national state. Like Communism, this seems just in theory but would be catastrophic in practice. Who really believes that the Israelis and Palestinians could coexist in a way that Serbs, Croats and Bosnians could not? The end of Zionism would merely be the beginning of a new nightmare for Jews and Palestinians alike.

Yet Israel is doing much to make even the pained, conflicted love of liberal Jews impossible. Without a two-state solution, the country will soon consist of a Jewish minority ruling over an oppressed Arab majority. Comparisons to South Africa will become ever more apt. And when the Arabs living under Israel's thumb demand their vote, they'll have justice and the sympathy of the world on their side. The idea of liberal Zionism will become an outright contradiction.

Most of the Jews who came to the J Street conference love Israel, but not with the kind of militant, unquestioning love one finds in the Aipac crowd. Most of them don't love Israel more than they love righteousness. The irony, though, is that right now, Aipac and its right-wing allies are supporting policies that will doom Israel as a Jewish democratic state, and poison the relationship between Israel and the Diaspora, a relationship essential to Israel's security. An end to the settlements and the creation of a coherent Palestinian state are absolutely fundamental to the future of an Israel worth supporting. Liberalism may sit uneasily with Zionism, but it's the only thing that can save it.