Occupied Jerusalem: The US wants a four-month Israeli building freeze in occupied east Jerusalem, one of a series of demands from Washington aimed at reigniting dormant peace talks, media reports said on Wednesday.

In return for a building freeze - something Israel has refused to contemplate in the past - the United States would pressure Palestinians to hold direct talks with Israel, the Haaretz daily reported.

The paper, quoting unnamed Israeli officials, said the four-month freeze would coincide with the period the Arab League had backed for talks between the Palestinians and Israel.

Israeli Prime Minister Benjamin Netanyahu returned last week from a tense visit to Washington that appeared to deepen a bitter row with the administration of President Barack Obama over the building of Jewish settlements, including in annexed Arab east Jerusalem.

He was reportedly given a set of demands for wide-ranging measures including the extension of a partial settlement halt and the release of hundreds of Palestinian prisoners to promote a restart of the stalled peace process with the Palestinians.

Neither Israel nor the US has said what the demands are. However, Netanyahu has been meeting with his security cabinet to craft a response to the US demands.

Israel's Channel Two news, which also reported the demand for a Jerusalem freeze, said no answer was expected from Israel until after the Passover holiday ends next week.

Officials in Netanyahu's office declined to comment on the reports.

The spat with Washington erupted after Netanyahu's government announced it would build 1,600 new homes for Jewish settlers in east Jerusalem as US Vice President Joe Biden was in the region earlier this month hoping to promote peace talks.

The Palestinians see east Jerusalem as the capital of their promised state, and refuse to resume direct negotiations with Israel without a complete freeze of settlement construction in the occupied territories.

The two sides had agreed earlier this month to hold US-brokered indirect talks but the announcement of the plans to build 1,600 settler homes in Occupied east Jerusalem brought the initiative to an abrupt halt.

Israel has already agreed to a 10-month freeze of settlement construction in the West Bank, excluding Occupied Jerusalem, which Israel considers its capital.

And since returning from Washington, Netanyahu has said Israel would not stop building in all of Occupied Jerusalem.

"The prime minister's position is that there is no change in Israel's policy on Jerusalem that has been pursued by all governments of Israel for the last 42 years," his office said on Friday.

Direct negotiations have been frozen since Israel launched a devastating 22-day military offensive in the Gaza Strip in December 2008 in a bid to halt rocket attacks from the Palestinian territory ruled by the Islamist Hamas movement.