Sharon told reporters on Tuesday before flying to Washington for talks with US lawmakers and Jewish leaders, the dispute was decades-old and did not mar the Texas meeting between the two leaders, which he called a great success.

The prime minister said that while US opposition to the settlements dated back to when Israel first captured the West Bank and Gaza Strip in the 1967 Middle East war, Israel had nevertheless continued to build communities to keep a hold on the land.

Strategic areas

"It was not to antagonise the US, but to keep areas that seem strategic to Israel," Sharon said.

He said Israel would keep large settlement blocs such as  Maale Adumim. "The blocs will be part of Israel, with everything that that entails," Sharon said, indicating the construction that will link Maale Adumim to Jerusalem would continue.

The latest dispute stems from differing interpretations of a statement made by Bush last year and reaffirmed on Monday, where he recognised Israel's need to keep large settlement blocs in the West Bank, citing "new realities on the ground".

Israel believes this allows for expansion of existing settlements, while the US says this would endanger peace with the Palestinians.

His comments came as he met a number of Jewish members of the US congress to impress Israel's determination to hold on to areas it considers of significant strategic importance.