Haley also addressed the Palestinians' vehement opposition to the US decision to move its embassy to Jerusalem and recognize the city as Israel's capital.
The Palestinians no longer view Washington as a neutral negotiator and have been calling for a collective approach to try and broker Middle East peace.
Israeli politicians slammed Palestinian Authority President Mahmoud Abbas for his speech to the UN Security Council Tuesday, branding him a "liar", a falsifier of history, and accusing him of duplicity.
President Mahmoud Abbas said in the course of earlier talks with Russian President Vladimir Putin the Palestinian National Authority had no plans to cooperate with the USA in the status of Middle East peace process intermediary.
He reportedly added that because members of the national religious sector have gained more senior positions in the Israeli military in recent years, a future evacuation of settlements could lead to an internal rift and even a potential civil war.
In December, the General Assembly voted 128-9, with 35 abstentions, to reject the USA decision to recognize Jerusalem.
Abbas left the Security Council meeting room immediately after finishing his speech, without listening to the delegates from Israel and the US.
"You have made it clear, with your words and with your actions, that you are no longer part of the solution".
"But we will not chase after you", Haley said.
During the UNSC quarterly open debate on the issue on Jan 25, the U.S Ambassador to the UN, Nikki Haley, harshly criticised Mahmoud Abbas and questioned his will to pursue peace.More news: Fergie responds to National Anthem backlash: 'I honestly tried my best'
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She noted that top Trump Mideast negotiators - the president's son-in-law Jared Kushner and special representative Jason Greenblatt - were sitting behind her "ready to talk".
"These vast security and humanitarian challenges throughout the region should occupy more of our attention, rather than having us sit here month after month and use the most democratic country in the Middle East as a scapegoat for the region's problems", she said. "The choice, Mr President, is yours", Haley said.
The Israeli-Palestinian peace process has been deadlocked since a major push by the administration of Trump's predecessor Barack Obama ended in failure in April 2014.
Tillerson also said that the Trump administration's Middle East peace plan is "fairly well advanced" after several months of work, though he offered no details on when the proposal might be unveiled or what it might contain.
The Palestinians hope that greater global involvement in the peace process will serve to counter what they see as a U.S. stance biased in favor of Israel.
Ya'akov Katz, founder of the " West Bank Jewish Population Stats" report sponsored by prominent settler institution "Bet El" which Trump's closest Middle East advisers have been tied to, said that the settler population grew at almost twice the rate of Israel's overall population past year.
He said Abbas has refused to meet Israeli Prime Minister Benjamin Netanyahu for 7 1/2 years "to negotiate peace", and he told council members that instead, the Palestinian president has been coming to the United Nations.
Among them are a string of United Nations resolutions calling on states not to move their embassies to Jerusalem until the status of the city is decided by an Israeli-Palestinian peace deal.
In December, the General Assembly voted 128-9, with 35 abstentions, to reject the United States decision to recognize Jerusalem.