WASHINGTON - US Secretary of State John Kerry on Sunday congratulated Rami Hamdallah on his appointment as new Palestinian prime minister to replace Salam Fayyad.

"We congratulate Dr Rami Hamdallah, the next prime minister of the Palestinian Authority. His appointment comes at a moment of challenge, which is also an important moment of opportunity," Kerry said in a statement.

"Together, we can choose the path of a negotiated two-state settlement that will allow Palestinians to fulfill their legitimate aspiration, and continue building the institutions of a sovereign and independent Palestinian state that will live in peace, security, and economic strength alongside Israel," Kerry said.

The United States recognized the extraordinary contributions by Fayyad, who has worked tirelessly to build effective Palestinian institutions, Kerry added.

Palestinian President Mahmoud Abbas on Sunday assigned Hamdallah, a linguistics professor at Nablus' Al-Najah University, the task to form a new government in the West Bank. Hamdallah is expected to pick his ministers within the three-week deadline under the basic Palestinian law.

Upon accepting the resignation of the US-backed economist Fayyad, Abbas said he would form a government in agreement with Hamas, which took over Gaza after routing pro-Abbas forces in 2007, but the two sides failed to agree on several outstanding issues.

In a renewed push by the Obama administration for restoring the long-stalled Israeli-Palestinian peace negotiations, Kerry has already visited the Middle East four times this year.

But no tangible results have been achieved due to the reluctance by the Israelis to make concessions on the settlements issue, and the deep schism between the weakened Fatah-dominated Palestinian National Authority in the West Bank and Hamas which rules the Gaza Strip.