The United States on Wednesday rejected Turkish President Recep Tayyip Erdogan's proposal for two states in Cyprus, urging continued efforts for a united island with two zones.

"We think only a Cypriot-led process - bizonal, bicommunal - will bring peace and stability in Cyprus," Victoria Nuland, the under secretary of state for political affairs, told a Senate hearing.

Erdogan on a visit to divided Nicosia on Tuesday called for two separate states on the island, brushing aside a UN-backed goal of two zones with separate regional administrations that would remain a unified state.

He also took another step to open the ghost town of Varosha in defiance of UN resolutions, a step that already drew a strong US rejection.

Nuland said she spoke to Turkish officials in Ankara on Wednesday to urge a reversal of the "provocative" decision.

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