The Palestinian Authority has reacted negatively to Israel's offer to temporarily restrict construction in Jewish settlements in the West Bank, BBC reported.
Chief negotiator Sayeb Erekat said any settlement freeze that did not include East Jerusalem was unacceptable.
Israeli Prime Minister Benjamin Netanyahu said the 10-month restriction was part of a policy he hoped would give a new impetus to peace talks.
The US said Israel's decision would help "move forward" peace efforts.
"We believe that through good-faith negotiations the parties can mutually agree on an outcome which ends the conflict and reconciles the Palestinian goal of an independent and viable state based on the 1967 lines, with agreed swaps, and the Israeli goal of a Jewish state with secure and recognised borders," US Secretary of State Hillary Clinton said in a statement.
US Middle East envoy George Mitchell said the move did not represent a settlement construction freeze, but was nevertheless "significant" and might have "a substantial impact on the ground".
