FIFA fails to take decision in Israel-Palestinian dispute
The world body's ruling council declined to adopt any of three possible actions recommended by an international commission which spent more than two years looking at the long-running battle.
The FIFA Council said it "must remain neutral with regard to political matters" in line with the world body's statutes.
The Palestinian football association had demanded FIFA sanctions over six teams playing in the Israeli league which are based in Israeli settlements in the occupied West Bank.
FIFA president Gianni Infantino called the dispute "exceptionally complex" because of the political situation in the Middle East.
It involved "issues which are there since 10,000 years and have not been solved yet and football is not going to solve them either I am afraid," he told a press conference.
He added that "any interference in the status quo in these territories, in the whole area, with regard to football, would have or could have an aggravating effect."
The Palestinians complain that their players face harassment and even arrest by Israel when trying to move between the occupied West Bank and Gaza and that some have been prevented from travelling to international tournaments.
The Palestinian Football Association (PFA) said Israel had breached FIFA statutes which state that a member country's teams cannot play matches on the territory of another association without permission.
Israel said FIFA should stay out as there are no recognised frontiers for a Palestinian state.
FIFA in 2015 appointed a commission led by Tokyo Sexwale, a South African businessman and politician, to look into the complaints.
Sexwale told AFP there has been "marked progress" in conditions in the past two years but that Palestinian football has been left "in limbo".
"I have an opinion on whether the council took the right decision but for the moment it is irrelevant," he said.
The FIFA Council in an extraordinary move refused to let the world body's annual congress in May take a decision on Sexwale's report and said it would choose the action. Its final decision rejected all the options put forward by Sexwale however.
However the Palestinian association has already gone to the Court of Arbitration for Sport which is expected to give a ruling in January.
Palestinian Football Association chief Jibril Rajoub said that "the FIFA Council's decision is taken in violation of its own statutes, it is a violation of international law and international humanitarian law."
Israel's Minister of Interior Security Gilad Erdan called the FIFA decision "a great victory".
"The attempt of the instigator of terrorism Jibril Rajoub to use sports as a political weapon against Israel has failed and we will continue to work to thwart the boycott initiatives of the Palestinians."
The CAS could force FIFA to hold a vote at its next congress on the Palestinian demands.
Infantino said that FIFA would follow any CAS decision.