The US has criticised Theresa May after her office rebuked US Secretary of State John Kerry for comments he made about Israel.
Mr Kerry caused controversy when he branded the Netanyahu administration the "most right-wing in Israel's history".
In what Downing Street admitted was an unusual move, the Prime Minister's spokesman responded by saying it was "not appropriate" to attack the composition of the democratically elected government of an ally.
In comments which appeared more in tune with the outlook being taken by President-elect Donald Trump, Mrs May said it was wrong to focus on single issues like settlement building, rather than the wider peace process.
Earlier this week Mr Kerry accused the Israeli government of undermining attempts to reach a two-state solution to the conflict with the Palestinians by continuing to build settlements in the West Bank.
While the UK said it opposed such developments in the occupied territories, Number 10 made clear a more broadly ranged approach was needed to encourage peace.
A spokesman for the Prime Minister said: "The settlements are far from the only problem in this conflict. In particular, the people of Israel deserve to live free from the threat of terrorism, with which they have had to cope for too long.
"And we do not believe that it is appropriate to attack the composition of the democratically elected government of an ally.
"The Government believes that negotiations will only succeed when they are conducted between the two parties, supported by the international community."
The US state department reacted with similar vigour to the UK government's statement.
A spokesperson told The Guardian newspaper: "We are surprised by the UK Prime Minister's office statement given that Secretary Kerry's remarks - which covered the full range of threats to a two-state solution, including terrorism, violence, incitement and settlements - were in-line with the UK's own longstanding policy and its vote at the United Nations last week."
The UK backed the UN resolution passed last week that condemned the continued expansion of settlements in the Palestinian territories.
But the Prime Minister's spokesman told Sky News she was expressing concern about the language Mr Kerry had used.
Some are viewing Downing Street's move as an attempt to align the UK with the incoming Trump administration.
President-elect Trump, who made pro-Israel comments during the election campaign, responded angrily to the UN resolution, claiming on Twitter: "The big loss for Israel in the United Nations will make it much harder to negotiate peace. Too bad, but we will get it done anyway!"
