If reports that prime minister Netanyahu has established a new coalition in Israel in order to help him rejuvenate the peace process with the Palestinians are right, it is needed desperately.

If a process can be described to exist, it is in dire straits. Palestinians, on every front, pursue last ditch measures: administrative detainees are on hunger strike, approaching death. The Palestinian Authority plans to seek recognition of statehood from the United Nations, despite warnings from the United States that such a policy will lead to withdrawal of aid, threatening the one bright spot on the West Bank - increased levels of successful security by the authority.

Still, Israel continues to establish settlements on the West Bank. In two visits this week, I saw, first, an absurd situation in the ancient centre of Hebron, where settlers are protected by a massive Israeli Army presence, stopping day to day life for many local Palestinians who try to run shops and travel to their own homes. Secondly, I saw the encroachment of settlers on grazing land used by local Bedouin tribes, legitimised by demolition orders. One new prefab erected by a European NGO, and the toilet nearby, was to be demolished on 24 hours notice by local administrative order.

The official from Israel's Ministry of Foreign Affairs told me that a one state solution would be a "disaster for Israel". But the continued establishment of Israeli settlements in the West Bank, the bulk of which is to be the heart of the new state of Palestine, is a real and immediate threat to the two state solution which both Israel and Palestine, as well as all the prominent international players, seek. For every extra settlement is an extra card in the hand of the Israeli negotiators and is an extra settlement that will need to be vacated if and when an agreement is reached.

Israel's negotiating position, that it will agree to immediate, unconditional talks, looks reasonable. But for the Palestine Authority to accept this whilst new settlements on its territory are established will undermine its credibility with the people in Hebron and the Bedouin and add to its own precarious position, in the face of opposition from Hamas.

My own discussions in Israel and Palestine this week have led me to conclude that the position on the ground is urgent: prime minister Netanyahu and president Abbas must act to achieve immediate change. A desperately difficult situation is creating potential flash points every day. If the new Israeli government gives the prime minister time and room to act, that is good. It is necessary and it must be done fast.

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