Israel has come under pressure from the United States to declare a freeze on settlement activity in order to kickstart negotiations, but Netanyahu said on Sunday Israel had still not decided whether it would make any gestures on the issue. 

'Dialogue continues'

"No decision has been taken on this matter and no conclusion has been drawn," he told Israeli radio stations when asked to comment on reports that Israel was set to agree to a nine-month halt in the West Bank but not in annexed east Jerusalem.

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"These are rumours," he said. "We have not accepted anything and are continuing the dialogue with Washington."

Israel has said that it will not issue any new tenders for settlement construction until 2010, but building in exisiting settlements in the West Bank will continue.

George Mitchell, the US envoy to the Middle East, will meet Israeli officials later this week to discuss the issue, which Netanyahu has said he would like to resolve in order to resume talks with the Palestinians in September.

Solana is on a four-day tour of the region, which began on Sunday with a visit to Syria.

In Damascus, he met Bashar al-Assad, the Syrian president, to discuss "ways of reviving the peace process," according to the state-run Sana news agency.

Al-Assad said that he would support peace with Israel if it met the conditions of UN Security Council resolutions which call on it to withdraw from areas occupied in the 1967 war, including the Golan Heights, the West Bank and east Jerusalem.

"Syria is working for a fair and global peace based on UN Security Council resolutions 242 and 338," the Sana news agency quotes al-Assad as saying.

Solana will meet Salam Fayyad, the Palestinian prime minister, in Ramallah later on Monday, before heading to Lebanon and Egypt.