Binyamin Netanyahu, Israel's prime minister, has called a crisis "inner cabinet" meeting after returning from difficult talks in the US over the issue of settlement activity in occupied East Jerusalem.
The extraordinary meeting, held on Friday, follows Netanyahu's return from a troubled-three day visit to Washington where he failed to resolve a dimplomatic crisis over Israel's settlement building plans.
Israel is struggling to get relations with the US back on track after Israel earlier this month announced plans to build 1,600 settlements on occupied Palestinian land.
The move prompted the Palestinians to pull out of indirect peace talks with Israel and caused a rift with Washington as the announcement came during a visit to Israel by Joe Biden, the US vice-president.
Zvi Hauser, Netanyahu's cabinet secretary, said the group of seven senior ministers would consider a package of goodwill gestures drawn up during Netanyahu's US visit.
"All aspects of the issue will be examined and they will formulate Israel's position according to Israel's interests and in the time needed to do so," he said.
Sherine Tadros, Al Jazeera's correspondent in Jerusalem, said the cabinet would likely focus on three issues.
"Firstly, the idea of putting core issues like the status of Jerusalem on the negotiating table between Israel and the Palestinians even before they get to negotiations at the so-called indirect proximity talks stage.
"Secondly is the issue of releasing 2,000 or so Palestinian prisoners from Israeli jails in a move to bolster the confidence behind Mahmoud Abbas, the Palestinian president.
"Thirdly, an idea to put some of the Israeli-controlled areas of the West Bank under the authority of the Palestinian Authority," she said.
"But what is clear is that Israel hasn't changed its stance on construction in East Jerusalem and that has put it on a collision course with the Obama administration."
Hauser said it was unlikely there would be quick agreement from the discussions and denied media reports of a US deadline to supply answers by Saturday night.
While in Washington, Netanyahu met Barack Obama, the US president, but with no statement after the meeting, speculation has been rife about the atmosphere during the talks.
The Fox News website on Friday reported that Obama had walked out of one of the meetings with Netanyahu after failing to gain a written promise of concessions on settlement activity.
The report went on to say that the US president invited Netanyahu to stay at the White House, consult with advisers and "let me know if there is anything new", according to a US congressman who spoke to the prime minister.
No public statements were made by the two leaders following the meeting, no photo opportunities were presented and no access was granted for reporters.
But Robert Gibbs, the White House press secretary, rejected claims that Obama was avoiding publicity, saying: "This is the way we felt most comfortable handling this one."
Following Netanyahu's return, Nir Hefez, the prime minister's spokesman, told Israel's army radio that Israel had achieved understandings with the US, which included a point that "construction policy in Jerusalem doesn't change".
But Mark Regev, a spokesman for the prime minister's office, quickly clarified that Hefez was "articulating the Israeli position ... not articulating a joint position".
Before peace talks can move forward, the Palestinians want a complete Israeli settlement freeze in occupied East Jerusalem and the rest of the West Bank.
"There is absolutely nothing new, as of this moment, regarding the situation facing the peace process," Nabil Abu Rdainah, an aide to Mahmoud Abbas, the Palestinian president, said.
Abbas is likely to discuss the situation with the Arab League, which meets in Libya on Saturday.