In their talks earlier, Abbas, right, rejected Clinton's request to resume negotiations [AFP]

The settlement issue should be considered as part of peace negotiations, Hillary Clinton, the US secretary of state, said at a news conference in Jerusalem late on Saturday.

"There has never been a precondition. It's always been an issue within the negotiations," she said.

She said Israel has made "unprecedented" concessions on settlement building.

For his part, Binyamin Netanyahu, the Israeli prime minister, speaking at the start of a weekly cabinet meeting on Sunday, said: "I hope very much that the Palestinians will come to their senses and enter the peace process. The peace process is an Israeli interest as much as it is a Palestinian one."

'Preconditions' opposed

Netanyahu criticised the Palestinians for what he called "setting preconditions".

"We have shown a willingness to do unprecedented things to relaunch the process," he said.

"But we are encountering the opposite from the Palestinians. We are encountering preconditions from the Palestinians that haven't been set in all the 16 years of the peace process."

The administration of Barack Obama, the US president, had previously demanded that Israel halt all settlement building before negotiations could resume, a move that was applauded by the Palestinians but which brought the US and Israel to loggerheads.

The settlements are considered illegal under international law.

Shifting position

In May, Clinton had said Obama "wants to see a stop to settlements. Not some settlements, not outposts, not natural growth exceptions".

But after bringing Mahmoud Abbas, the Palestinian president, and Netanyahu together at the United Nations in New York in September, Obama called only for "restraint" on settlements, not a "freeze".

The move is unlikely to be accepted by the Palestinians.

Mouin Rabbani, a contributing editor to The Middle East Report, said that it was not surprising that the US had changed its stance on the negotiations.

"In January [and] February this year there were all kinds of hoorays on the basis that the Obama administration was somehow going to effect a revolution in American foreign policy.

"If you look at what's happened over the course of the past year, it's basically been a gradual collapse of the American position, which in my view [means] there is] absolutely no surprise that they've ended up where they are now - basically heeding Israel's decision to continue settlement constructon in the occupied territories," Rabbani said from Amman, Jordan.

Rabbani said a "pattern is consistent with American policy since the beginning of Israel-Palestine diplomacy in the early 1990s - always leaning on the Palestinians to make concessions in order to solve the problems they're having with the Israelis. No surprise here; nothing new".

Akiva Eldar, the chief political commentator with the Israel's Ha'aretz newspaper, said: "It is a betrayal. The secretary of state, I assume with the full support of the president, has turned around after 10 months of negotiating the precondition of freezing settlements ... she says there is no precedent to preconditions.

"The fact that there was no precedent actually demonstrates why there are now 300,000 settlers living in the West Bank and just 16 years ago when the Oslo Agreement was launched there were 109,000 settlers.

"The message from Obama was change. Not about keeping the same kind of American policy that turns a blind eye to Israel putting facts on the ground."

Palestinian stand

Abbas earlier rejected Clinton's request to resume negotiations when they met in Abu Dhabi in the United Arab Emirates.

Saeb Erekat, the chief Palestinian negotiator, said Abbas rejected the US request because the recent deal reached between George Mitchell, the US Middle East envoy, and Israel "does not include a complete freeze of settlement activities".

Nabil Abu Rudeina, a spokesman for Abbas, said the move reflected US inability to persuade Israel to freeze settlement building, but that Clinton had told the Palestinians that the US still considered the settlements illegal.

"The US position concerning these settlements - as we heard from Clinton in the UAE - was clear, that they consider all settlement activities illegal and this is an official US position which we heard many times before," he said.

"The real problem is that Israel is not ready to discuss these issues and America is still unable to convince the Israelis to come back to the 'road map'," Abu Rudeina said, referring to a plan for steps to be taken by Israel and the Palestinians, first outlined in 2002.

"Even the previous American administration [under George Bush] in Annapolis agreed that settlement activity should be frozen."

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