US Secretary of State Condoleezza Rice called on Israel Tuesday not to undermine peace talks with the Palestinians after a report found it had nearly doubled Jewish settlement construction.

On her seventh visit this year in a long-shot push for a peace deal by January, Rice said the two sides were "somewhat closer" in their talks despite deep public scepticism about the chances of ending the six-decade conflict.

Israel's Peace Now group, citing data from the Central Bureau of Statistics, said construction had begun on more than 443 structures in settlements in the occupied West Bank since January compared with 240 starts in the same period in 2007.

"The settlement activity is not conducive to creating an environment for negotiations," Rice told a news conference with Palestinian President Mahmoud Abbas in the West Bank city of Ramallah. "Yet negotiations go on." Earlier in Jerusalem, after talks with Israeli Foreign Minister Tzipi Livni, Rice said in reference to settlements that "anything that undermines confidence between the parties ought to be avoided".

Abbas described settlements as "the main obstacle" in the peace process.

Palestinians say settlement building denies them land they want for a contiguous state. A US-backed peace "roadmap" calls on Israel to halt all settlement activity in the West Bank and for Palestinians to rein in militants.

Israel has said it plans to keep building in settlement blocs that it wants to keep in any future peace deal with the Palestinians.

During her 25-hour visit, Rice made clear she still aims to reach a peace accord before US President George W. Bush leaves office. But she played down chances of striking any partial accord in time for the September UN General Assembly.

"If this had been easy, somebody would have solved it a long time ago and it has fallen to us to try again to find a solution to the Palestinian-Israeli conflict," Rice said.

"God willing and with the goodwill of the parties and the tireless work of the parties we have a good chance to succeed," she said.

No breakthrough

Few analysts believe Rice, who saw Israeli Prime Minister Ehud Olmert before meeting Livni, can secure a major breakthrough.

Progress towards a peace deal has been hampered by violence, Israeli settlement expansion and political uncertainty in Israel stemming from a corruption scandal that has forced Olmert to announce plans to step down.

At her news conference with Rice, Livni said Israeli settlement activity had been reduced "in the most dramatic way", especially in areas east of the barrier Israel is constructing in the West Bank.

Israel terms the project a security necessity. Palestinians condemn the network of razor-wire tipped fences and cement walls as a landgrab.

"The peace process is not, and should not be, affected by any kind of settlement activities," Livni added, cautioning against allowing what she termed "noise" to derail peace negotiations.