There will be no negotiations with a Palestinian unity government unless the Hamas movement gives up its vision of destroying Israel and embraces peace, Prime Minister Benjamin Netanyahu said Sunday.

Speaking on CNN, the Israeli leader said the preferable course of action to get peace negotiations back on track would be for Palestinian president Mahmud Abbas to renounce Hamas, the Islamist movement whose charter calls for the destruction of Israel.

"Either Hamas disavows the destruction of Israel and embraces peace and denounces terror, or president Abbas renounces Hamas," Netanyahu told CNN's State of the Union.

"If one of those things happened, we could get back to the peace negotiations. I hope he renounces Hamas and gets back to the peace table, as I've just said. The ball is in his court."

Netanyahu suspended faltering peace talks with the Palestinians last week after the Palestine Liberation Organisation (PLO) and Hamas agreed to work together to form a unity government, in a move to end years of bitter political rivalry.

In a speech to PLO leaders on Saturday, Abbas said the new unity government, which is to be formed of political independents, would recognise Israel, reject violence and abide by existing agreements -- the demands laid out by the Middle East peacemaking Quartet.

But a senior cabinet minister on Sunday ruled out any talks with the new government -- even if it accepted the Quartet conditions.

"We will not negotiate with a government backed by Hamas, even if it's a... technocrat government," Economy Minister Naftali Bennett told reporters at the Foreign Press Association in Jerusalem.

"We won't talk to such a government even if it accepts the Quartet terms because it's backed by Hamas," he said.

"If Hamas (itself) accepted the Quartet terms, that would be a different story," he said.

Bennett, an outspoken hawk who heads the far-right Jewish Home party and has consistently opposed the peace talks, said Israel should move to annex swathes of the occupied West Bank given the apparent failure of the peace talks.

"What several ministers in the government... are talking about is gradually applying Israeli law on parts or all of Area C," he said, referring to a sector which covers more than 60 percent of the West Bank where the vast majority of Jewish settlers live.

"Is it mainstream government now? Not yet, it's not, but should we push for it? I think we should for a simple reason: the Palestinians have gone unilateral, we can go unilateral," he said, suggesting Israel offer full citizenship to the 100,000 Palestinians living there.

The struggling peace talks took a nose dive at the end of March when Israel reneged on a pledge to release two dozen Palestinian prisoners and the Palestinians responded by signing 15 international treaties in a step denounced by Israel.

Bennett, who campaigned on the issue of annexation during the 2012 elections, painted a saccharine picture of life in the Israeli-annexed West Bank with "life becoming more and more bearable for everyone."

"What can the Palestinians hope for? Already they have the best life in the entire Arab world -- they're not being hanged because they are gay, women are allowed to drive," he said.

"But full self-governance, have your anthem, have your flag, pay your own taxes, have your own elections -- we're fine with it."

Seized by Israel in the Six Day War of 1967, the West Bank is now home to hundreds of thousands of Israeli settlers, as well as about 1.7 million Palestinians.

Israel annexed east Jerusalem in 1967 in a move never recognised by the international community.

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