Archbishop Bernardito Auza, the Vatican's delegate to the United Nations, said it struggled not to share the "frustration" of the UN coordinator of the Middle East peace process over the lack of improvement in the situation.
In a speech to the UN Security Council, Archbishop Auza also said whilst the Vatican recognises Israel's "genuine and legitimate concerns for its own security", its safety could only come if it worked with its neighbours rather than isolating itself.
Mr Auza also repeated the Vatican's calls for peace between Israel and Palestine, via the Two-State Solution.
He said: "The Holy See is deeply concerned at the total lack of progress of the negotiations between Palestine and Israel.
"It is difficult not to share the frustration expressed by the then UN Special Coordinator of the Middle East Peace Process, Mr. Robert Serry, during his last Security Council briefing on March 27 last.
"As was recognized on that occasion, Israel has genuine and legitimate concerns for its security; however, such security will come not in isolation from its neighbors, but in being a part of them through a negotiated peace with the Palestinians through the implementation of the 'Two-State Solution', which has the support of the Holy See and of the international community in general.
"The Holy See joins its voice once more with all people of peace to call for serious and concrete negotiations that will reinvigorate the peace process."
Last year, Israel and Gaza (a part of Palestine) engaged in a war with each other, where approximately 72 Israelis and approximately 2200 Gazans died.
It's part of a long dispute over land ownership and borders between the two nations spanning since mid-Twentieth century, which has divided opinions in the Middle East and internationally.
The United Nations has called for Israel to recognise Palestine as an independent state, known as the "Two-State Solution". However Israel has refused to do this, citing the area of land where Palestinians live as its own and not a separate country.