Foreign Minister Julie Bishop has said "all trust has broken down" between the United States and Russia over Syria, and described the bombing of the city of Aleppo by regime forces as an "unprecedented" atrocity.
Her remarks, reflecting the scale of the destruction and the backslide in international efforts to rein in the violence, followed reports of a regime air strike on a hospital in eastern Aleppo.
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Battle for Aleppo rages on
The Syrian Army and rebels fight fierce battles in the center and north of Aleppo, as part of a major government offensive to retake the rebel stronghold.
Speaking on the ABC's Insiders program, Ms Bishop also said a Lockerbie-style international tribunal – referring to the 1988 Libyan bombing of an airliner over Scotland – could be used to bring to justice those behind the downing of flight MH17.
On Syria, Ms Bishop painted perhaps the bleakest picture yet of the intractable conflict. She said "all options" had to be on the table, including an arms embargo in which the US and Russia withdrew military support for the rebels and regime respectively.
"I witnessed two meetings between the Russian Foreign Minister, Sergey Lavrov, and US Secretary of State John Kerry," she said. "Let me say that all trust has broken down. Neither side trusts the other side."
She said the Russian-backed regime of Bashar al-Assad and the anti-government rebels – the more moderate of whom are being armed and helped by the US – both believed they could win militarily. As long as this was the case, "the killing and the war will continue", she said.
A shaky ceasefire hatched several weeks ago between Washington and Moscow has collapsed. Ms Bishop said that Russia seemed to have "given up any pretence of a ceasefire at this point", but continued negotiations remained the only way to salvage a peaceful outcome.
"The violence and the atrocities going on in Aleppo are unprecedented," she said. "They have to continue to talk because the indiscriminate bombing is killing thousands of civilians.
"It is a humanitarian disaster on an unprecedented scale – nothing we've seen in our lifetime."
She said any move by the US to start bombing Assad forces would spark an "all-out war".
"One option would be an arms embargo," she said. "One option would be for both sides to withdraw military support from the regime, from the opposition groups, and force them to the negotiating table."
On MH17, Ms Bishop said that in the wake of the detailed investigation that confirmed a Russian-made Buk missile was used to down the plane over Ukraine, the next step was to verify the identities of those the investigation concluded were responsible.
"There are a number of options available to us ... There can be a Lockerbie-style prosecution, a tribunal that is set up by the international community, or there can be domestic prosecutions in, say, the Netherlands," she said.
"And as long as they had the powers of extradition and the like, a prosecution could be mounted successfully in a domestic jurisdiction, but that would cover the interests of the 298 victims aboard that flight.
"Both have positive and negative attributes. I think a domestic-style tribunal would possibly be easier to establish, but you'd have to make sure that it had all the necessary powers – for example, extradition – to be able to absolutely hold those responsible for this atrocity to account."