Friedman, an Orthodox Jew and one-time president of the USA support group for the Bet El settlement, is a longtime friend and lawyer to Trump.
"I think, first of all, two state solution is what we support", Haley said.
His remarks come a day after Trump and visiting Israeli Prime Minister Benjamin Netanyahu refused to endorse the two-state solution as the preferred outcome of peace talks. The Palestinians seek both territories, captured by Israel in the 1967 Mideast war, for their hoped-for state.
President Donald Trump calls out to the media after escorting Israeli Prime Minister Benjamin Netanyahu to his vehicle to depart the White House in Washington, Wednesday, Feb. 15, 2017. With visiting Israeli Prime Minister Benjamin Netanyahu at his side, Trump on Wednesday dropped a US commitment to a two-state solution, long a bedrock of Washington's Middle East policy, even as he urged Netanyahu to curb settlement construction.
Cardin also pressed Friedman about past statements that appeared to oppose a two-state solution addressing the Israeli-Palestinian conflict and noted his backing for settlements, including some deep inside the West Bank.
As Trump's appointee, Friedman has faced heavy criticism for his financing of Israeli settlement Beit El.
The son of an Orthodox rabbi, Friedman has a long record of being a firebrand for Israel, including calling liberal Jews "kapos".
A shift in US policy towards Israel has already begun.
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On Wednesday, five former US ambassadors issued a letter saying that Friedman is unqualified and has staked out "extreme, radical positions".
Thomas Pickering, Dan Kurtzer, Edward Walker, James Cunningham and William Harrop sent a letter to the Senate Foreign Relations Committee asking it not to confirm Friedman to become the nation's next ambassador to Israel.
An EU-funded poll of 1200 people on Thursday found that 55 percent of Israelis and 44 percent of Palestinians supported a two-state solution to the on-going occupation of Palestinian lands.
Netanyahu is trying to recalibrate ties with Israel's top ally after eight years of high-profile clashes with former President Barack Obama, in part over Israel's policies toward the Palestinians.
"The inflammatory rhetoric that accompanied the presidential campaign is entirely over", Friedman said during his confirmation hearing.
The Holocaust scholars, including a handful not based in the United States, stop short of a call to reject Friedman, but say: "We hope that you will keep Mr. Friedman's disrespectful and politically cynical use of the Holocaust in mind as you consider his nomination to serve as our ambassador to Israel".
"If he comes to spend some time here on a personal level, that's between him and his wife and God", Fromwitz said. "As far as his job is concerned, I believe he is enough of a professional that he will truly represent whatever the Trump government decides whenever they get around to deciding".
The letter includes concerns over Friedman's position should Israel annex the "West Bank", stating "address the question of whether Mr. Friedman would defend as ambassador the established American view that annexation of West Bank territory, outside the context of an global resolution, would be counterproductive and a violation of worldwide law".