Washington feels "an arrangement that works" can be hammered out with Israel on the settlement issue, a senior administration official told The Jerusalem Post on Thursday, indicating the US recognizes some wiggle room in defining a "settlement freeze."

"There's a professional, constructive dialogue on this issue," the official said, shortly after US President Barack Obama delivered his speech in Cairo. "We have differences, but believe we can find an arrangement that works."

The official said that some of the comments reportedly made on the issue by anonymous officials both in Israel and the US had been "heated" and not always credible.

"We're working this through, consistent with the relationship between strong allies," he said.

Israeli officials, meanwhile, were struggling to understand what precisely Obama meant when he discussed the settlement issue in his speech.

"The United States does not accept the legitimacy of continued Israeli settlements. This construction violates previous agreements and undermines efforts to achieve peace," he said. "It is time for these settlements to stop."
Obama addresses the Muslim...

Obama addresses the Muslim world in a speech from Cairo University, Thursday.
Photo: AP

One diplomatic official said the construction of this paragraph seemed intentionally vague, enabling further discussion on the matter with the US.

US Middle East envoy George Mitchell is scheduled to arrive in Israel on Tuesday, to continue discussing the matter.

The senior US official said Washington and Jerusalem were also continuing to have a conversation about a two-state solution, something Obama forcefully backed in Cairo but which Prime Minister Binyamin Netanyahu has still not endorsed.

The official stressed that Obama's speech was not a one-time effort at outreach to the Islamic world, and that the idea was now for continuous dialogue with Muslims. He added that this candid dialogue would help the US "get a fair hearing" in the Islamic world regarding its "unshakable" backing for Israel.

The official acknowledged that Obama may have missed an opportunity during his speech to speak about the Jews' historical connection to Israel, framing Israel's legitimacy instead only within the context of persecution and the Holocaust.

He stressed that Obama had spoken about the Jews' historic connection to the land in the past.

"It was certainly not a deliberate omission this time," he said.