Israel's unveiling of plans to build 1,600 new homes in the West Bank sparked one of the worst rows between Israel and the US in many years.
The announcement was made during the visit of the Joe Biden, the US vice-president, and has been described by one of Barack Obama's closest aides as "an affront to the US that could undermine peace efforts in the Middle East".
With Israel making apparent moves to ease the row, questions remain over whether that will be enough to satisfy the Obama administration.
Al Jazeera's Patty Culhane reports.
Source: Al Jazeera