Israel's foreign minister told UN envoys on Thursday that a new Palestinian unity government including Hamas would be a setback to peace attempts, diplomats said.

Foreign Minister Avigdor Lieberman briefed 15 UN envoys, including nine Security Council ambassadors, on the Middle East peace talks and the growing confrontation with Iran in a meeting at a New York hotel.

Lieberman said an accord signed this week by the heads of Fatah and Hamas "does not contribute to the advancement of peace negotiations or the well being of the Palestinian people," Israel's UN mission said in a statement.

Fatah, which is led by Palestinian president Mahmud Abbas, and Hamas, the militant group which rules Gaza, signed an accord which calls for a government of "independent technocrats" to oversee reconstruction in Gaza and to "facilitate" new elections in the Palestinian territories.

So far there is no suggestion that Hamas will have a role in the interim government.

Lieberman said the accord "reflects the personal interests" of Abbas and Hamas leader Khaled Meshaal, the Israeli mission added.

"Israel will not accept a Palestinian government that includes Hamas, unless it changes its current policies, recognizes Israels right to exist and accepts all Quartet conditions," Lieberman said.

Talks between Israel and the Palestinians have been frozen since September 2010. The Palestinians have demanded that Israel halt settlement construction in the Palestinian territories. Israel rejects any conditions for talks to settle the Middle East conflict.

Lieberman, who is on a US tour which included meetings in Washington with US Secretary of State Hillary Clinton, also demanded that the Security Council act on Iran, the statement said.

"Israel keeps all options on the table" if international sanctions do not convince Iran to halt its nuclear drive, Lieberman said.

Western countries say Iran is trying to build a nuclear bomb and many experts say Israel is planning for a pre-emptive military strike against Tehran's nuclear installations. Iran denies it is seeking an atomic weapon.

Lieberman called on the Security Council to act on statements by Iran's Supreme Leader Ayatollah Khamenei and President Mahmoud Ahmadinejad who have made calls "to wipe Israel off the map," the Israeli mission said.

The meeting was attended by ambassadors from Britain, Germany, Russia, India, South Africa, Portugal, Azerbaijan, Guatemala, Italy, Singapore, the Czech Republic, Poland, Ethiopia, the Netherlands and Togo, the mission said.