US Secretary of State Antony Blinken vowed on Sunday to oppose Israeli settlements or annexation in the West Bank but promised to judge Prime Minister Benjamin Netanyahu's incoming government by actions and not personalities.

Netanyahu is expected within days to return to power after sealing a coalition deal with extreme-right movements including Religious Zionism, which is set for a post in charge of settlements in the occupied West Bank.

Speaking to J Street, a left-leaning pro-Israel US advocacy group, Blinken offered congratulations to the veteran Israeli leader, who has clashed with previous Democratic administrations in Washington.

“We will gauge the government by the policies it pursues rather than individual personalities,” Blinken said.

But he said President Joe Biden's administration would work “relentlessly” to preserve a “horizon of hope”, however dim, for the creation of a Palestinian state.

“We will also continue to unequivocally oppose any acts that undermine the prospects of a two-state solution, including but not limited to settlement expansion, moves toward annexation of the West Bank, disruption to the historic status quo of holy sites, demolitions and evictions, and incitement to violence,” Blinken said.

He said that the Biden administration will insist on “core democratic principles, including respect to the rights of LGBTQ people and the equal administration of justice for all citizens of Israel”.

The far-right groups in Netanyahu's coalition will include Noam, whose leader Avi Maoz is staunchly opposed to LGBTQ rights.

Netanyahu has said Jerusalem's Pride march will continue, contradicting Maoz, who has vowed to cancel it.

“On the LGBT questions, I just won't accept any of that,” Netanyahu said in an interview with NBC News.

Speaking before Blinken's remarks, Netanyahu pointed out that the outgoing government led by Yair Lapid relied on support from an Arab Israeli party with Islamist roots and said he “didn't hear a word from all the chorus of critics” about it.

Religious Zionism's leader Itamar Ben-Gvir, who is expected to play a key role, is a staunch advocate of Jewish settlements. Until a few years ago, he had a portrait in his living room of Baruch Goldstein, who massacred 29 Palestinian worshippers at a Hebron mosque in 1994.

Jeremy Ben-Ami, the president of J Street, told reporters the State Department had a “strong case” to consider Ben-Gvir persona non grata and that the US administration should consider not dealing with other officials from extreme backgrounds.

'No substitute' for peace

The November 1 election was Israel's fifth in less than four years and came after the collapse of Lapid's diverse coalition that tried to keep out the scandal-plagued Netanyahu.

Any fresh attempt by Israel to seize the West Bank could go against promises Netanyahu made in 2020 to the United Arab Emirates, which became the first Arab state in decades to recognise Israel.

Netanyahu and the administration of then US president Donald Trump hailed the so-called Abraham Accords as a key achievement.

Three other Arab nations quickly followed in discussing ties with Israel, whose commercial relationship with the UAE has soared over the past two years.

Drawing some of the biggest applause from J Street, Blinken said, “For all of its benefits, normalisation between Israel and its neighbours is not a substitute for building peace between Israelis and Palestinians.”

“I know that many people are disillusioned; many people are frustrated,” Blinken said.

“We've been trying to get to a two-state solution for decades and yet it seems that we've only gotten further away from that goal,” he said.

But he warned not to “succumb to cynicism” and to keep working for peace.

The United States has made no major diplomatic effort to broker a two-state solution since the Barack Obama presidency, with Biden administration officials privately sceptical that they can reach any agreement with Netanyahu.