Israel should have accepted a set of U.S. guarantees in exchange for an extending a freeze on West Bank settlement construction, opposition leader and Kadima chairwoman Tzipi Livni said on Sunday in a televised interview with Christiane Amanpour of ABC News.

"In choosing between building more buildings or making peace, I prefer to make peace," Livni said. "I believe that peace treaty between Israel and the Palestinians is in [the] Israeli interest - it's not a favor to President Obama. Israel needs to make these kind of decisions in order to live in peace."

Livni appeared on Amanpour's "This Week" program in a joint interview with Palestinian Prime Minister Salam Fayyad.

Livni blamed the composition of Prime Minister Benjamin Netanyahu's government for the lack of progress in the Middle East peace process.

“The current coalition is Mr. Netanyahu’s choice," she said. "My views about the peace process and the need to achieve peace are different from this coalition. I offered Netanyahu in the past more than once to have a different coalition that can not only speak about the idea of two states for two peoples, but also translate it into peace treaty with the Palestinians. He decided to have this coalition, unfortunately."

Fayyad said that the Palestinians have given the Americans their positions on the core issues of the conflict but that Israel had not yet done the same.

"In order to give the process the kind of credibility that's required is for us to really know, with precision, where it is that the government of Israel stands on the fundamental issue of what it is that's meant by an end to Israeli occupation. What does Mr. Netanyahu have in mind when he says 'Palestinian state,'" he said.

Amanpour asked Fayyad if he planned to declare a Palestinian state unilaterally.

"What we are committed to is statehood. Not a declaration of statehood, we're looking for a state. We did make a declaration of statehood [in] 1988. This time we're looking for a real state on the ground," he said.

Livni and Fayyad both participated in the Saban Forum in Washington. Addressing the Saban Forum on Friday, U.S. Secretary of State Hillary Clinton said that a Palestinian state achieved through negotiation is inevitable.

Clinton said both Israel and the Palestinian Authority bore responsibility for the failure of the direct peace talks that were held in September but broke down after Israel's 10-month freeze of West Bank settlement construction expired on September 26.

Last week, the U.S. and Israel announced that negotiations between Washington and Jerusalem over a new freeze on West Bank settlement construction in exchange for a set of U.S. guarantees had hit a dead end.