Palestinians are determined to build state institutions in preparation for statehood, caretaker Prime Minister Salam Fayyad said in Ramallah on Sunday.

Speaking alongside US officials, he dismissed Israeli concerns as irrelevant.

"They're talking about unilateralism, to which we reply - yes, building state institutions is our responsibility and we embrace it," Fayyad said.

"A Palestinian state will be established, so long as Palestinians want it, which they do, as it is their natural right to live in a homeland," he added. "This isn't dangerous, although everyone knows, as our people know, that the road is long and not of roses."

Prior to his remarks, Fayyad briefed US officials, including members of its Congress, on his plan for building a state within two years. But he said "Israeli stubbornness" was getting in the way, and urged the country to "stop settlements and abide by international law and legitimacy."

"The international community must emphasize Palestinian rights, at the top of which is ending the occupation, and ensure the right to determine our own future, rather than relying on the occupying power to carry out its wishes," he said.

US Congressman Joseph Lieberman reaffirmed America's commitment to the two-state solution, applauding "the positive role played by the Palestinian Authority and its efforts to build state institutions," and added that the government's platform was "thorough and encouraging."

"I know some people are concerned that this is unilateral," he added, according to The Jerusalem Post. "But it seems to me that it is unilateral in a healthy sense of self-development."

Netanyahu: We too can act unilaterally

The PA has been mobilizing international support for declaring statehood, chief PLO negotiator Saeb Erekat said on Saturday. The Ramallah leadership will bring the issue to a vote before the United Nations Security Council, which would declare a Palestinian state on the 4 June 1967 border with Israel, he said, calling the initiative a response to Israel's policies.

But Israeli Prime Minister Benjamin Netanyahu and like-minded officials warned on Sunday that Israel was capable of declaring unilateral steps of its own.

"There is no substitute for negotiations between Israel and the Palestinian Authority and any unilateral path will only unravel the framework of agreements between us and will only bring unilateral steps from Israel's side," he said, according to the Israeli daily newspaper Haaretz.

Speaking at the Saban Forum in Jerusalem, the Israeli prime minister added that while he was not interested in "negotiating for the sake of negotiations," but added that he was willing to come to an agreement with Palestinians.

Bill Clinton: Netanyahu has made major concessions

Meanwhile, former US President Bill Clinton said Palestinians would get a better deal through negotiations than by unilateral action.

He said the international community may eventually blame Palestinians for the stalled peace talks, rather than Netanyahu's refusal to freeze settlements.

In fact, Clinton said, "This is the first time that any Israeli government has said we will not issue an new permits and not have any new settlements. Echoing remarks by his wife and US Secretary of State Hillary Clinton, the former president said Netanyahu's gestures "should "should be enough to open the door and start talking."

In any event, America still wants Israel to stop building settlements, he said, defending US President Barack Obama's demands. "You should not think that President Obama is your enemy."

Clinton said that since Israel receives so much in US military and economic aid on the pretext of security needs, "we owe it to you to say what the best way to achieve that security is."

"No American president can serve in good conscience and not be committed to the security of Israel and not be committed to the security of Israel," he added, and pointed to America's efforts to thwart Richard Goldstone's fact-finding mission as evidence that the US backs Israel.