Bridging gaps between Israel and the United States over settlement growth in the occupied West Bank will require hard work, a senior Israeli official said on Wednesday, playing down prospects for a swift breakthrough.

U.S. President Barack Obama wants Israeli Prime Minister Benjamin Netanyahu to declare a total settlement freeze. Netanyahu wants to build further within existing blocs to accommodate what he calls "natural growth" in settler families.

"A lot of hard work is needed to reach common ground," said a senior Israeli official travelling with Netanyahu to Paris, where he will meet French President Nicolas Sarkozy.

Israeli Foreign Minister Avigdor Lieberman, who lives in a West Bank settlement, appealed for greater U.S. flexibility.

Last week, in contrast, Netanyahu's newly-appointed ambassador to Washington, Michael Oren, voiced confidence that a deal on settlements was within reach.

Western diplomats said the abrupt cancellation of Netanyahu's planned meeting on Thursday with Obama's Middle East envoy, George Mitchell, underscored the difficulty both sides faced bridging their differences.

Mitchell will meet instead with Israeli Defence Minister Ehud Barak in Washington on Monday.

Israeli officials said Netanyahu decided to postpone talks with Mitchell to allow for more time for preparations.

They denied Israeli media reports that U.S. officials took the decision to delay the meeting because they were irritated by the Israeli government's refusal to stop settlement building.

RIFT

Barak, in remarks in Jerusalem on Wednesday, sought to play down the rift over settlements, citing Netanyahu's readiness to "enter willingly into a regional peace initiative", one of Obama's foreign policy objectives.

"In the context of broad regional dialogue, and talks without pre-conditions with the Palestinians with the aim of two states for two peoples, the issue of settlements will be dealt with in its fitting proportion and I believe that, in this context, it can be solved," Barak added.

In lieu of a full settlement freeze, Netanyahu has said he would not build additional enclaves in the territory, captured by Israel in a 1967 war, that Palestinians seek for a state.

"We are talking about (allowing) 'natural growth' within existing borders of existing settlements. And I think that the government's willingness to take complicated steps needs to be respected. We expect this flexibility will be appreciated by the other side," Lieberman said.

"It can't be expected from us to accept a situation where it's impossible to build synagogues or kindergartens or to add rooms for a family," he added.

Senior Israeli officials, speaking on condition of anonymity, said Netanyahu's goal was to reach "understandings" with the Obama administration that would allow construction already under way to go forward.

But Palestinian President Mahmoud Abbas has ruled out a resumption of peace talks with Israel until Netanyahu commits to a full settlement freeze, including natural growth, as called for under a 2003, U.S.-backed peace "road map".

Israel has sought to ease tensions over settlements by committing to remove more West Bank roadblocks and unauthorised settler outposts.