International mediators trying to promote Mideast peace warned in a highly anticipated report Friday that Israel’s settlement expansion is eroding the viability of a Palestinian state and raises “legitimate questions” about its commitment to a two-state solution.

The Quartet of Mideast negotiators — the U.N., United States, European Union and Russia — also criticized the glorification of Palestinians who commit “terrorist attacks” against Israel and called on the Palestinian Authority to “act decisively” to stop incitement to violence and clearly condemn “all acts of terrorism.”

The Quartet report called for immediate steps to reverse three trends that it says are “severely undermining hopes for peace” — Israeli settlement construction and expansion; the Palestinians’ illicit arms build-up, militant activity and lack of unity; and continuing violence, “terrorist attacks” against civilians and incitement to violence.

Without urgent action, the mediators warned that “a one-state reality of perpetual occupation and conflict” will become entrenched which “is incompatible with realizing the national aspirations of both peoples.”

The Quartet, which is supposed to guide the two parties to peace, had been sidelined in peacemaking efforts which the United States has led. But following Secretary of State John Kerry’s failure to broker a peace agreement in April 2014, the Quartet is now trying to take on a bigger role and give efforts to reach a peace deal much broader international backing.

In a statement released with the report, the Quartet invited Israel and the Palestinians “to engage with it on implementing its recommendations and creating the conditions for the resumption of meaningful negotiations that resolve all final status issues.”

But initial responses from the Palestinians and Israel showed no interest in engaging.

Palestinian official Saeb Erekat said the report on first reading “does not meet our expectations” because “it attempts to equalize responsibilities between a people under occupation and a foreign military occupier.”

He said the Palestinians will continue to insist that all previous agreements be implemented with a time frame including “a full cessation of Israeli settlement activities.”

Israel’s U.N. Ambassador Danny Danon said the report “provides conclusive proof of official Palestinian Authority incitement against Israel.” But he rejected its criticism of Israeli settlement expansion in the West Bank and east Jerusalem, which the Palestinians want as the capital of their state.

“The Palestinians must understand that international initiatives will not bring peace to the Middle East,” he said.