Last-ditch talks between Israeli and Palestinian negotiators on salvaging a teetering, US-brokered peace process ended without a breakthrough Sunday, Palestinian sources told AFP.

"The crisis continues. During the whole meeting, the Israelis threatened the Palestinians and no solution to the crisis was found," a Palestinian official said, speaking on condition of anonymity.

Warning that the peace process was on the edge of collapse, an Israeli official close to the talks said that even US Secretary of State John Kerry, its tireless sponsor, was cooling off.

"The way it's looking now, the talks as they were several weeks ago are no longer relevant," the source told Israeli news website Ynet.

"Israel is preparing to return to routine dealings with the Palestinians as they were before the negotiations started nine months ago.

"We are noticing a real coolness in the way the Americans are treating (the peace process), and it's obvious that today's Kerry is not the same Kerry from a few weeks ago," the official added.

A second official, however, said another chance needed to be given to the efforts of Israel's chief negotiator Tzipi Livni.

"We have to wait a few more days... A lot of efforts are being done to salvage the situation," the official said.

Israeli Prime Minister Benjamin Netanyahu, meanwhile, threatened to retaliate if the Palestinians proceed with applications to adhere to 15 international treaties.

"These will only make a peace agreement more distant," he said of the applications the Palestinians made on Tuesday.

"Any unilateral moves they take will be answered by unilateral moves at our end."

Netanyahu's remarks, made at the beginning of the weekly cabinet meeting, came hours before Israeli and Palestinian negotiators met US envoy Martin Indyk in an attempt to save the peace process.

The three-way meeting began in the afternoon and ended in the evening in Jerusalem.

Kerry, the driving force behind the peace push, warned on Friday that there were "limits" to the time and energy Washington could devote to the talks process, as his appeals to both sides to step back from the brink fell on deaf ears.

Palestinian president Mahmud Abbas rejected Kerry's plea to withdraw the treaty applications, and Netanyahu ignored US appeals to refrain from tit-for-tat moves, asking for a range of retaliatory options.

Israel says Abbas's move was a clear breach of the commitments the Palestinians gave when the talks were relaunched in July to pursue no other avenues for recognition of their promised state.

The Palestinians say Israel had already reneged on its own undertakings by failing to release a fourth and final batch of prisoners a week ago, and that the treaty move was their response.

"They refused to free the prisoners and that's why there's no progress," said the Palestinian source.

- 'Facts on the ground' -

"The Palestinians have much to lose from a unilateral move. They will get a state only through direct negotiations and not through empty declarations or unilateral moves," Netanyahu said.

"We are prepared to continue talks, but not at any price."

Netanyahu noted the Palestinian application to the international institutions came "the moment before agreeing on the continuation of the talks" beyond their April 29 deadline.

Yasser Abed Rabbo, general secretary of the Palestine Liberation Organisation executive committee, blamed the latest talks crisis on Israel, which "wants to extend the negotiations for ever" as it creates "more facts on the ground."

"Israel always implements unilateral steps," he told Voice of Palestine radio, saying the Palestinians were already being punished by Israel.

Officials from Netanyahu down have been cautious not to specify the exact nature of punitive measures Israel might take.

But media reports mention preventing Wataniya Palestine Telecom from laying down mobile phone infrastructure in the Hamas-ruled Gaza Strip, and halting Palestinian construction projects in parts of the West Bank.

Israel's chief negotiator, Justice Minister Livni, suggested that Washington scale down its "intensive" involvement in the process with the Palestinians.

"Part of what took place in the past months was primarily negotiations between us and the US, and less with the Palestinians," she told Channel 2 television on Saturday.

"We need bilateral meetings between us, including between the prime minister and Abu Mazen (Abbas)."