A two-state solution will never work because noone can work out where to draw the lines that everyone will agree on.
In theory only a one-state solution can work. But not in our lifetime, though I do note that there are an awful lot of Palestinians who live pretty comfortably within the current State of Israel - working, educating their children, voting for Parliament, serving in the Israeli Army ...
The other alternative is that the Palestinians leave to disperse amongst the Arab countries. But that'll never happen either - the Arabs actually can't stand them (not Arab enough) and the Arab states are in quiet league with Israel against the greater enemy Iran.