U.S. President Barack Obama, in an interview aired on Israeli television on Tuesday, said Prime Minister Benjamin Netanyahu policy backing settlements in occupied territory is making a future Palestinian state impossible.

"Bibi says that he believes in the two-state solution and yet his actions consistently have shown that if he is getting pressured to approve more settlements he will do so regardless of what he says about the importance of the two-state solution," Obama said, referring to Netanyahu by his nickname.

Some 570,000 Israelis now live in the Israeli-occupied West Bank and in East Jerusalem, together home to more than 2.6 million Palestinians. Israel captured the West Bank and East Jerusalem in the 1967 Middle East war. It later annexed East Jerusalem in a move not recognised internationally.

Obama, who leaves office on Jan. 20, said that in the past few years both he and U.S. Secretary of State John Kerry had "countless times" personally appealed to Netanyahu to stop settlement activity, but that those pleas were ignored.

"Increasingly what you are seeing is that the facts on the ground are making it almost impossible, at least very difficult, and if this trendline continues - impossible, to create a contiguous, functioning Palestinian state," Obama told Channel Two's Uvda programme.

Israel expects to receive more favourable treatment from Obama's successor, President-elect Donald Trump.

Trump has denounced the Obama administration's Israel policy and has vowed to move the U.S. Embassy from Tel Aviv to Jerusalem, riling the Palestinians. He has also named as U.S. ambassador to Israel a lawyer who raised money for a major Jewish settlement.

Relations between Netanyahu and Obama have been strained for years over their differences regarding settlement-building and Iran nuclear deal's with world powers signed in 2015.

Ties deteriorated to a low point in December when Washington did not exercise its veto to stop a U.N. Security Council resolution that demands an end to Israeli settlement building, prompting harsh criticism from Netanyahu of Obama and Kerry.

The right-wing Netanyahu has accused the Obama administration of being obsessed with settlements and not recognising what he called "the root of the conflict - Palestinian opposition to a Jewish state in any boundaries."

Netanyahu, for whom settlers are a key constituency, has said his government has been their greatest ally. The Palestinians want the West Bank and East Jerusalem, along with the Gaza Strip - which Israel also captured in 1967 but withdrew from in 2005 - for an independent state.

The last U.S.-brokered peace talks broke down in 2014.

Washington deems settlement activity illegitimate and most countries view it as an obstacle to peace. Israel cites a biblical, historical and political connection to the land - which the Palestinians also claim - as well as security interests.