The ousting of Egyptian President Hosni Mubarak should "jolt" Israelis and Palestinians into making a fresh effort to find a Middle East peace settlement, Foreign Secretary William Hague said.
Mr Hague acknowledged that events in Egypt and Tunisia, where President Zine al-Abidine Ben Ali has also been forced out in a popular uprising, could complicate the search for a peace deal.
However he warned that time was running out for an agreement based on a two-state solution as Israeli settlements continued to encroach into occupied Palestinian territories.
Israel in particular had seen Mr Mubarak as a stabilising force in the region as the guarantor for the past 30 years of the historic Israeli-Egyptian peace treaty.
Mr Hague insisted however that they should not fear the rise of democracy in the Arab world and he called on both Israelis and Palestinians to return to the direct talks which they broke off last September.
"What we should be afraid here of is not democracy but uncertainty and instability that can make national leaders more cautious and say that we are only going to deal with one thing at a time," he told the BBC Radio 4 Today programme.
"Perhaps one of the good things that might come from events in Egypt and Tunisia is that policymakers in Israel and among Palestinians will be jolted to see that it is vital now to take this forward because in a few years time a two-state solution will be much, much more difficult to achieve.
"There is some life in it but it is on life support and it will not live for many more years. The Israelis are making settlements in occupied territory steadily changing the nature of the area and there is a growing weariness about the whole approach to the two-state solution. But it is still very much the best solution.
"It is vital both to Israel's long-term security and to any hope of a viable Palestinian state for both of them to make the necessary compromises.
"Sadly in recent months, neither have been ready to do so and I hope that these events will jolt them into that rather than make them more cautious about doing so."