Netanyahu's meeting with Obama was announced late on Sunday only after he had arrived in Washington, forcing US and Israeli officials to deny that the last-minute invitation reflects the US president's frustration with the hawkish Israeli prime minister.
'No more settlements'
The White House appeared wary not to present Monday's end-of-day meeting as a backing of Netanyahu's stance.
Robert Gibbs, the White House spokesman, said ahead of the talks: "The policy of the United States government for many decades has been: no more settlements, that's not something that is new (with) this administration."
Netanyahu on Monday urged Mahmoud Abbas, the Palestinian president who last week announced he would not run for re-election in January, to immediately renew peace negotiations.
"I say today to Mahmoud Abbas, the leader of the Palestinian Authority, 'let us seize the moment to reach an historic agreement. Let us begin talks immediately,'" he told a conference of North American Jewish leaders.
Palestinian officials said Abbas's move last Thursday was due to his disenchantment with the US stance on Israeli settlements.
Speaking at the forum in Washington on Monday, Netanyahu said Abbas should "seize the moment to reach an historic agreement".
The Palestinians called off negotiations after Israeli forces began their assault of the Gaza Strip last December and January, and have refused to return to talks until Israel commits to a complete halt to settlement activity.
The Obama administration appears to have eased US pressure on Israel over the settlements issue, calling for restraint in construction instead of the earlier push for a complete freeze of what Obama had called "illegitimate" settlements.
Palestinians say the apparent policy shift has dashed hopes of reviving negotiations soon and Monday's White House meeting, though low key, is likely to further anger and frustrate the Palestinians.
Netanyahu has only offered a moratorium on the building of new settlements – meaning that settlement projects that have already received permits from the Israeli government will go ahead.
Hillary Clinton, the US secretary of state, last week moved to clarify Washington's position on the settlements after she called Netanyahu's proposal for the moratorium "unprecedented", during a trip to the Middle East.
Those comments were interpreted by many Palestinians as US support for Israel's plan to continue several settlement projects on land that the Palestinians say should form part of their future state.
Clinton later said that the Obama administration still wanted a total freeze on all settlement building activity, but that it should not be a precondition for fresh talks between Israel and the PA.