"We are working on an approach that both guarantees Israel's security and fully respects Palestinian sovereignty," he told reporters accompanying him in Tel Aviv at the end of a visit including meetings with both sides.
"We remain hopeful that we can achieve that final status agreement."
Kerry rejected speculation the sides would initially be led to an interim agreement.
"Our goal remains as it always has been - for the Israelis and Palestinians to reach a final status agreement - not an interim agreement, a final status agreement," he said.
Asked whether that timetable could change, Kerry stressed "we're not talking at this point about any shifts".
His comments came after separate meetings Kerry had with Palestinian president Mahmud Abbas and Israeli Prime Minister Benjamin Netanyahu, before heading to Asia.
Kerry told reporters that US military expert General John Allen outlined in talks with Abbas a security plan for the West Bank and Israel, which could be implemented following a peace accord.
Israel demands a Palestinian state would be demilitarised and the right to retain long-term military presence along the Jordan Valley, which would be the Palestinian state's eastern border with Jordan.
The Palestinians reject the possibility of Israeli military presence on their territory after a peace deal, but accept the notion of an international force.
Kerry also said that "the next tranche of the (release of Palestinian) prisoners is due to take place on the 29th of December, and it will take place then."
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