Foreign Minister Murray McCully has told the UN Security Council it isn't doing enough to resolve the conflict between Israel and the Palestinians.
"Violence has escalated, settlements have continued and trust between the two parties has been further eroded - and the council has been largely a spectator," he said in a speech on Monday night, local time.
New Zealand holds one of the non-permanent seats on the council and Mr McCully was speaking during a debate on the situation in the Middle East.
He said it was nearly two years since negotiations between Israel and the Palestinians were suspended.
The two state solution, which New Zealand supports, could be moving beyond reach.
"If matters continue as they have for the last two years without action from this council and others, the two state solution will be dead," he said.
"Against this background it is difficult to understand why the UN Security Council has not passed a single resolution on this question for over seven years - that the council could be a silent witness to the demise of the two state solution."
New Zealand last year proposed a draft text setting out a pathway for the two state solution but was persuaded there was insufficient support for it to proceed.
Mr McCully said because the situation had deteriorated, New Zealand would "resume the conversation" about a focused council resolution.