"If that is what he wants, that is his business. The last I know, Washington is 6,000 miles from Jerusalem, while Jericho is 67."
Netanyahu announced the temporary settlement suspension on Wednesday, saying it was aimed at encouraging negotiations with the Palestinians.
The suspension excludes building projects already under way as well as areas of the West Bank that Israel annexed to its Jerusalem municipality after occupying the territory in the 1967 Middle East war.
Hannan Ashrawi, a member of the Palestinian legislative council, said such crucial omissions were tantamount to no freeze at all.
"If you analyse the Israeli position you will see that they are building even more settlements," she told Al Jazeera.
"They are expanding, they are building in Jerusalem, they are finishing contracts they are building public institutions, they are building infrastructure and then they are saying there is a freeze.
"If you accept the fact that Jerusalem is excluded it means you have tacitly accepted that Jerusalem has been annexed by Israel."
The United States has afforded the Israeli the 10-month suspension some praise.
George Mitchell, the US special envoy to the Middle East, called it "significant", saying it went further than other Israeli commitments.
"It falls short of a full settlement freeze, but it is more than any Israeli government has done before," he said.
The US has been pressing Israel to freeze settlement construction in order to allow peace talks, which have been on hold since Israel launched its 22-day offensive in the Gaza Strip last year, to resume.
Comments by Avigdor Lieberman, Israel's foreign minister, suggested Israel felt it had now done enough. He told Israel's Army Radio that the "ball is in the Palestinian court".
"What we could have contributed, we did,'' he said.
"The Palestinians will make their considerations based on internal considerations that don't need to concern us."
Asked about Lieberman's comments, Ashrawi dismissed the foreign minister's words.
"The whole presentation as though it is now up to the Palestinians to respond is misleading. It's certainly a manipulation of perceptions," she told Al Jazeera.
Palestinian negotiator Erekat called on Washington and other world powers to commit Israel to a full settlement freeze, not a partial one.
|Netanyahu has said that once the suspension ends the building will resume [AFP]
"I don't know how such a decision helps in resuming the peace process," Erekat said in a statement sent to journalists.
"We hope that the US and the world won't be dragged by Netanyahu's propaganda.
"They should focus their efforts and time on committing Israel to fully stop settlement in order to resume the peace negotiations soon."
Netanyahu's offer was also rejected by Palestinian President Mahmoud Abbas' Fatah party, which said it was "nothing new".
"Once again that this government still insists to continue the policy of escaping from the peace process," a statement from Fatah's central committee said.
About 500,000 Jews live in the West Bank and annexed areas around Jerusalem alongside 2.7 million Palestinians.
Palestinians say the settlements deny them the possibility of a viable state by cutting off Palestinian areas from each other.