At the current time a two-state solution is absolutely impossible because both sides, Israel and the Palestinian Authority (PA), are not interested.
Israel doesn’t want a terrorist state next door and the PA is, in fact, a moderate terrorist entity by glorifying mass-murdering terrorists. Moreover, after the upcoming elections the extremely corrupt, incompetent PA will lose to the more popular Hamas, at which point no part of Israel will be safe from rocket fire.
The PA is also not interested in running an independent state, because they’ll be dependent on Israel for everything such as electricity, water, gas, and many other necessities and will have to pay for them, while now they take these services for granted and have international financial support.
And there is another factor: Until the Arab and Muslim world recognize Israel’s right to exist and normalize diplomatic relationships, no single PA leader will ever sign a final agreement with the Jewish state for fear of his life — remember Anwar Sadat?