Israeli Prime Minister Benjamin Netanyahu praised President Barack Obama on Wednesday after Clinton retreated his condemnation over settlement "insult".

Her comments marked a second U-turn over Israeli settlement issue.

"We have an absolute commitment to Israel's security. We have a close, unshakeable bond between the United States and Israel," Secretary of State Hillary Clinton said.

"We are engaged in very active consultations with the Israelis over steps that we think would demonstrate the requisite commitment to the process," Clinton said in an appearance with Ireland's visiting foreign minister.

Israeli announcement to build 1,600 more houses on occupied land emerged hours after the arrival of Biden.

Both Biden and Secretary of State Hillary Rodham Clinton had condemned the move. Clinton, said "Israel's announcement of the project was an insult to the United States."

And she made clear that "the Israeli government needed to demonstrate not just through words, but through specific actions, that they are committed to this relationship and to the peace process."

But Netanyahu rejected US call to cancel the new expansion plan.

The office of Netanyahu immediately issued a statement saying that Israel "appreciates and respects the warm words" from Clinton on "the deep bond between the U.S. and Israel, and on the U.S. commitment to Israel's security."

An Israeli political source said Netanyahu spoke by telephone on Tuesday with the vice president. The source gave no details of their conversation.

"I have a deep appreciation for President Obama's commitment to Israel's security, which he has expressed many times," Netanyahu said in a statement.

Second in settlement issue

President Barack Obama initially called for a complete settlement freeze, but retreated its demand, only agreed to a 10-month moratorium on housing starts in the occupied West Bank.

At that time, Abbas said he was "surprised" by Washington's retreat to stand by previous pledge to call for a complete Israeli settlement freeze.

Abbas's frustration peaked when Clinton praised an Israeli proposal for some settlement limits as "unprecedented" after months of Washington demanding a full freeze.

The roadmap calls on Israel to remove all outpost settlements erected after 2001 and to stop settlement expansion, but thus far Israel has not heeded international demands for a complete settlement freeze.

The Palestinians had to drop the demand and agreed to up to four months of indirect negotiations after receiving Arab League endorsement.

The World Court has ruled all settlements illegal under international law.

A State Department spokesman made clear, however, that U.S. officials expected a formal Israeli response shortly to the demands Clinton laid out to Netanyahu last week, and that this would inform the next U.S. moves on the issue.

Reaffirming his demand, Abbas told reporters on Wednesday: "We demand the fulfilment of commitments before going to indirect negotiations."

U.S. Middle East peace envoy George Mitchell on Tuesday put off plans to return to the region. The State Department said he would not begin another mission until at least after Middle East peace mediators met in Moscow on Thursday and Friday.


Agencies