The prime minister has so far refused to agree to White House demands to halt all settlement expansion, without exception.

While Netanyahu has declared his commitment to peace before, he has avoided directly addressing how he plans to reach any agreement while remaining unwilling to give up control of most of the West Bank and East Jerusalem.

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The body language of US-Israeli tensions

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"I aspire to a stable peace based on the solid foundations of the security of the state of Israel and its citizens," he said at the cabinet meeting.

The Palestinians demand that the Gaza Strip, the West Bank and East Jerusalem be part of their future state and refuse to engage in peace talks until Israel agrees to freeze settlement construction and endorse a Palestinian state.

But Israel's settlement construction in the West Bank has been a major obstacle to peacemaking as it is seen by the international community as a way of controlling land claimed by the Palestinians.

Half a million Jews currently live in settlement blocks in the West Bank and East Jerusalem.

Obama has repeatedly called for an end to settlement expansion, in part to improve US relations with the Muslim world, which had been damaged by the policies of his predecessor, George Bush.

Ending settlements

Senior Israeli officials accuse Obama of not respecting an understanding Israel had with the Bush administration that included an exception for so-called "natural growth" of families already living in settlements.

But Hillary Clinton, the US secretary of state, told ABC news in an interview on Sunday that there was no official record of any such agreement.

"That was never made a part of the official record of the negotiations, as it was passed on to our administration," she said. "No one in the Bush administration said to anyone that we can find in our administration."

While Obama's emphasis on Israel ending settlement expansion is not a departure from US policy in the past, his direct and repeated calls in high-profile public appearances, echoed by Joe Biden, his vice-president, have put many in Israel on edge.

Under the Bush administration, Israel had enjoyed near unwavering support from Washington on many contentious issues, including settlement expansion.

But in speeches in Egypt and Europe this past week, Obama continued to press for a settlement freeze and for the pursuit of a two-state solution.

Obama said that Washington "does not accept the legitimacy of continued Israeli settlements" in his speech in Egypt.

But Netanyahu's right-wing coalition is committed to Israel's settlements and any shift on that position risks the collapse of the coalition.

Obama plans to dispatch George Mitchell, his envoy to the Middle East, to the region this week in an attempt to persuade Israelis and Palestinians to resume talks.

Mitchell has long advocated the need for a settlement freeze as mandatory for any tangible progress on peacemaking.