Nickolay Mladenov spoke after a minister from the Jewish Home party, which holds several portfolios in Netanyahu's rightwing government, declared the party would never support a two-state solution.
"The determination of some ministers in Israel to block progress and kill hope by promoting illegal settlements and rejecting a Palestinian state is concerning," he said in a statement to AFP.
Netanyahu this week brought hardliner Avigdor Lieberman and his Yisrael Beitenu party into the ruling coalition, naming him as defence minister.
In response, Jewish Home, another rightwing party in Netanyahu's coalition, said it would oppose any attempt at a two-state solution.
"As long as we are in the government, there will be no Palestinian state, there will be no settlement evacuations and we will not give any land to our enemies," Justice Minister Ayelet Shaked said yesterday, quoted in Israeli media.
Netanyahu had also said that an Arab League-endorsed peace initiative dating to 2002 "includes positive elements that can help revive constructive negotiations with the Palestinians".
Netanyahu's government, however, is widely referred to in Israel as the most rightwing in the country's history.
On Friday, in a French-led peace initiative, representatives from 30 countries and international organisations are due to meet in Paris to discuss a potential action plan.
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