Praise for Israel
The meeting came just days after she praised an Israeli proposal for a moratorium which would halt the building of new settlements, but leave many of those already under construction unaffected.
Clinton had called the Israeli plan "unprecedented" and said that Washington's demand for a full settlement freeze was not a precondition for talks between Israel and the Palestinian Authority (PA).
Clinton said that while the administration of Barack Obama, the US president, still wants an end to all settlement building activity, Netanyahu's plan went further than any previous Israeli offer.
Her comments sparked an outcry from Palestinian officials including Mahmoud Abbas, the Palestinian president.
A spokesman for Abbas condemned the remarks and said the US had failed to put enough pressure on Israel to abandon the completion of settlements already under construction or for which permits had been granted.
Saeb Erekat, the chief Palestinian negotiator, said on Wednesday that Israel is continuing to move ahead with plans to multiply settlement activity.
"The study that we have sumbitted to you proves that according to realities on the ground Netanyahu will build in 2010 and 2011 many more settlements than in 2009 and 2008," Erekat said.
"When Mrs Clinton says Mr Netanyahu's proposals were unprecendented, we only hope and wish she would read this document we gave her in Abu Dhabi," he said, referring to a meeting between Clinton and Abbas last Saturday in the United Arab Emirates.
While Netanyahu's plan would place a freeze on new settlements in the occupied West Bank, no Israeli restrictions would be placed on 3,000 buildings already under construction.
Furthermore, no restrictions will be placed on settlement projects in East Jerusalem, which the Palestinian Authority sees as the capital of a future Palestinian state.
Clinton attempted on Tuesday during a visit to Morocco to clarify her remarks on Washington's view of Netanyahu's plan, and said that progress had been made.
"It is not what we would want and it is nowhere near enough – but I think that when you keep your eye on what we want to achieve, it is a better place to be than the alternative, which is unrestrained," she told Al Jazeera.
Israel's settlement building programme is illegal under international law and several United Nations Security Council resolutions have called for it to stop.
But Israel has repeatedly ignored all international calls for it to stop its settlement building.