In the wake of US President Barack Obama's speech before the Turkish parliament, Jerusalem is preparing for the possibility of increased tensions with the American administration ahead of special envoy George Mitchell's visit to the region next week and Prime Minister Benjamin Netanyahu's scheduled trip to Washington in about a month.

During his speech Monday, Obama demanded that Israel's new rightist government and the Palestinians adhere to their Road Map and Annapolis Conference obligations. "Let me be clear: the United States strongly supports the goal of two states, Israel and Palestine, living side by side in peace and security," he said.

The PM's Office responded to the speech by saying "Israel values the president's commitment to its security and desire to advance the peace process." But a senior official in Jerusalem said, "You'd have to be blind not to be able see the writing on the wall."

According to Israeli officials, a confrontation with the US administration is unavoidable in light of Obama's address before the Turkish parliament and Foreign Minister Avigdor Lieberman's recent statement, according to which Israel was no longer obligated to the Annapolis process.

One source said both Netanyahu and Lieberman were expecting heavy US pressure ahead of Netanyahu's visit to Washington.

However, other senior officials in Netanyahu's government said they believed the US and Israel would find a way to avoid a dispute and set new guidelines for the Israeli-Palestinian peace process. According to them, the US has no choice but to acknowledge the fact that Israel's new government has a different agenda than former Prime Minister Ehud Olmert's coalition.

During his visit George Mitchell is expected to demand explanations regarding the stalemate in the negotiations with Palestinian President Mahmoud Abbas and Israel's position vis-à-vis a two-state solution based on the understandings reached at Annapolis.

Obama's Middle East envoy will apparently also demand that Israel clarify its stance on settlement construction and the dismantling of illegal West Bank outposts.

A Palestinian source told Ynet Tuesday that "the Americans understand that (Netanyahu's) government jeopardizes not only the peace process but the stability of the entire region.

Palestinian officials said that during Mitchell's visit they would stress the possibility that Israel would not respect past agreements and understandings, such as those reached at Annapolis.

One Palestinian source said the Obama administration has displayed "a profound understanding" for the need to freeze all forms of settlement construction and the house demolitions in east Jerusalem.