Palestinian leaders rejected overtures by US President Donald Trump on Wednesday after he said they would get something "very good" in exchange for his country recognising Jerusalem as Israel's capital.
Senior Palestinian official Ahmad al-Tamimi said the US president's assertion that he had removed Jerusalem from future negotiations was "a continuation of the US policies in favour of Israel".
Speaking to official Palestinian news agency WAFA, he added that Trump's push for a Israeli-Palestinian peace deal was impossible without "recognising east Jerusalem as the capital of the Palestinian state".
The December decision to recognise Jerusalem as Israel's capital and move the US embassy to the city sparked fury among Palestinians, with the political leadership cutting off ties to the US administration.
Palestinians see the eastern part of the disputed city as the capital of their future state.
The opening of the US embassy on May 14 saw mass protests and clashes on the Gaza border in which at least 63 Palestinians were killed by Israeli fire.
Speaking to supporters in the United States on Tuesday, Trump again defended the move, saying he had eased future negotiations.
"If there's ever going to be peace -- remember I said it -- with the Palestinians, it was a good thing to have done because we took it off the table, because every time there were peace talks they never got past Jerusalem," Trump said at a rally in the US state of West Virginia.
"And you know what, in the (future) negotiations Israel will have to pay a higher price because they won a very big thing."
"Now (Jerusalem's) off the table, there is nothing to negotiate. But they (the Palestinians) will get something very good because it's their turn next."
The move has greatly complicated efforts by Trump's administration to broker what he has called the "ultimate deal," as the Palestinians will no longer accept US mediation.
Speaking in Jerusalem on Wednesday morning, Trump's national security adviser John Bolton said he hoped the Palestinian leadership would move on from the embassy issue.
"As a dealmaker, as a bargainer, he would expect, you would expect, I would expect that the Palestinians would say 'ok, great, so we didn't get that one, now we want something else, and we'll see how it goes'," Bolton told journalists as he wrapped up a three-day visit to Israel.
Saeb Erekat, secretary-general of the Palestine Liberation Organisation, rejected Bolton's comments and said east Jerusalem must be the capital of a Palestinian state.
"The words of Bolton are nonsense and don't correspond to reality," Erekat said in a statement.
"You cannot talk about peace without Jerusalem being the capital of an independent Palestinian state on the basis of the 1967 borders."