Prime Minister Binyamin Netanyahu continued to refuse to yield ground on the settlement construction issue Wednesday, even though French President Nicolas Sarkozy squarely backed the US position and called for a complete halt to the construction.

Netanyahu, speaking with reporters after his meeting in Paris with Sarkozy, said that Israel and the US had an "unbreakable bond," but that "there can be differences of opinion between friends."

The prime minister reiterated what he has been saying for the last few weeks, that Israel would not build any new settlements or expropriate land to expand existing ones, but at the same time would allow for natural growth to let Jewish residents of the West Bank live normal lives.

"I hope it will be possible to solve the problems with the US," Netanyahu said. "I believe it is possible."

The prime minister arrived in Paris on Wednesday from Rome.

Although Netanyahu's scheduled talks with US Mideast envoy George Mitchell in Paris on Thursday was postponed, Defense Minister Ehud Barak is set to meet with Mitchell in the US on Monday to continue to search for a compromise on the issue. He is also expected to discuss movement and access issues for the Palestinians, as well as the Fatah-Hamas unity talks.

Barak, after meeting Wednesday in Jerusalem with Czech Foreign Minister Jan Kohout, said Israel was eager to enter into a regional peace initiative.

"Within the context of a wide regional discussion, and negotiations with the Palestinians without pre-conditions over two states for two peoples, the settlement issue will get its proper proportion, and I believe that within that context the issue can be solved," he said.

Diplomatic sources said the Barak meeting with Mitchell would deal with defining the parameters of a settlement freeze, meaning at what point can the construction of a house or apartment continue, and at what point would work have to be stopped.

These discussions are reminiscent of ones held in 1992 when Yitzhak Rabin came to power and decided to freeze public expenditures in the territories, while allowing money for construction of schools, synagogues and community centers.

As a result of his decision, some 7,800 housing units were frozen, of which 4,000 were canceled, and 3,800 were stopped before a first floor was built. Another 11,000 units that were in advanced stages of construction were completed.

State Department spokesman Ian Kelly described the cancellation of the Mitchell-Netanyahu meeting as "a joint decision made by respective staffs" and said it would be rescheduled, though he could not yet provide a date.

Other sources, however, said the decision to postpone was initiated by Israel, which felt the ground was not sufficiently prepared for a Netanyahu-Mitchell discussion. This meeting is now expected to take place in a few weeks when the envoy returns to the region.

During Barak's upcoming visit to the US, expected to be for only a day, he may also meet with US Secretary of State Hillary Clinton and senior adviser Dennis Ross.

Settler sources, meanwhile, said they feared the prime minister would cave in to some degree to US President Barack Obama and agree to build only to accommodate natural growth, something no Israeli government has ever done.

Dani Dayan, who heads the Council of Jewish Communities of Judea, Samaria and the Gaza Strip, said he was "very worried" about the situation.

"But I am encouraged that for many long weeks Netanyahu has stood firm against Obama on this specific issue," he said.

Dayan said that in the last few weeks settlers leaders had lobbied ministers and key politicians to allow construction in the settlements.

During the meeting with Sarkozy, the French president asked Israel "without delay to take all measures possible to encourage confidence, starting by the total freeze of settlement activities, as well as the decisive improvement of access and movements of Palestinian civilian populations," according to a statement from Sarkozy's office.

He also said Israel deserved security guarantees, and offered to help form an international force to secure a Mideast peace deal.

"France will never compromise on Israel's security," Sarkozy said.

He called Netanyahu's recent speech at Bar-Ilan University mentioning the possibility of a Palestinian state a major step toward "the only possible solution, that of two states."

Netanyahu said after the meeting that Sarkozy accepted the principles he laid out in his speech - that a final agreement would be based on a demilitarized Palestinian state living next to a Jewish state. The French president made clear, Netanyahu said, that Palestinians should return to the Palestinian state, and Jews to the Jewish one.

The fate of kidnapped soldier Gilad Schalit was also raised in the meeting, with the prime minister saying afterward that Sarkozy had done more on this issue "than any other leader in the world." Schalit holds both Israeli and French citizenship.

The two leaders expressed shared concerns about Iran, with Sarkozy stressing in the talks that "the prospect of a nuclear Iran is unacceptable."

Sarkozy and his government have strongly denounced the violent crackdown on opposition demonstrations in the Islamic republic.

Netanyahu will hold further meetings in Paris on Thursday, and is scheduled to return to Israel late in the evening.