Let me suggest a way forward.
the basic assumption is that there cannot be a permanent solution to the Israel-Palestinian conflict: The Palestinians are adamant in their demand that any final agreement must include the 'right of return' which mean the end of Israel as the nation state of the Jewish people.
However, prolonging the control of Israel over the Palestinians is no option. A majority of the Israeli public (and their representatives in the Knesset) are in favour of a Palestinian state existing side by side with a Jewish state. In this regard, most of the Israeli public is ready to support a withdrawal of Israel's presents (both military and the civilian settlements) from the majority of the pre-1967 territories, similar to the Israeli withdrawal from Gaza in 2005.
In light of the diplomatic deadlock in the negotiation, Israel should unilaterally withdraw from 90% of the territories and the Palestinians could declare on their independent state if they choose to do that. Israel will maintain its military presence in the border with Jordan, in several settlements blocks, and in the Jewish neighbourhoods of Jerusalem. The holy places of Jerusalem could be under international protection/UN supervision.