An Arab-backed draft resolution on the removal of Israeli forces from the occupied Palestinian territories by no later than 2017 has been submitted to the United Nations Security Council for a potential vote.

Israeli Foreign Minister Avigdor Lieberman called the resolution, which aims to find a peace deal with a year, a "gimmick".

"Certainly this will not hasten an agreement because without Israel's consent, nothing will change," Lieberman said in a statement.

"It would be better if the Security Council dealt with matters truly important to the citizens of the world, such as the murderous attacks this week in Australia and Pakistan, or discuss events in Syria and Libya, and not waste time on the Palestinian's gimmicks," he said.

The Palestinian UN Ambassador Riyad Mansour said that the Arab-backed resolution would not shut the door on further peace negotiations with Israel and the United States.

"We will continue negotiating with all of them and with the Americans if they are ready and willing so that we perhaps can succeed in having something adopted by the Security Council to open a serious door to peace," the envoy said.

"We are willing to work with those who want to work with us for meaningful things."

The draft resolution was formally submitted to the 15-member council by Jordan as Palestine is an observe to the UN and does not yet hold full member status.

The resolution seeks to create a Palestinian state based on the 1967 borders, a withdrawal of Israeli forces and "Jerusalem as the shared capital of the two States which fulfills the legitimate aspirations of both parties and protects freedom of worship."

The text also "calls upon both parties to abstain from any unilateral and illegal actions, including settlement activities, that could undermine the viability of a two-state solution."

US Secretary of State John Kerry said that the US did not object to the filing of the resolution as long as it was issued "in a thoughtful way that solves the problem".

"We don't have any problem with them filing some resolution, providing it's done in the spirit of working with people to see how we could proceed forward in a thoughtful way that solves the problem, doesn't make it worse," he said.

The Palestinian state, based on the draft resolution, would consist of the West Bank, the Gaza Strip and East Jerusalem.

After a meeting with Kerry in Rome, Israeli Prime Minister Benjamin Netanyahu said that Israel would reject any attempt by Palestinians and Europeans to impose conditions on them.

"Attempts of the Palestinians and of several European countries to force conditions on Israel will only lead to a deterioration in the regional situation and will endanger Israel," he said in a statement.

"Therefore, we will strongly oppose this."