The United States on Wednesday dismissed as "inaccurate" a report that it had agreed to let Israel build about 2,500 housing units already under construction in West Bank settlements.

"That report in that Israeli media outlet is inaccurate," State Department spokesman Ian Kelly said after the Maariv newspaper reported that Israeli Defence Minister Ehud Barak and US envoy George Mitchell had struck such a deal.

Under the arrangement reached in London on Monday, Maariv reported, Israel would be allowed to continue work on about 700 buildings already under construction on the occupied West Bank, or about 2,500 units.

But Kelly said "the bottom line" for US President Barack Obama's administration has not changed, "that all parties in the region have to honor their obligations."

He was referring to obligations laid out in the 2003 internationally-agreed roadmap for Palestinian-Israeli peace that calls for an Israeli settlement freeze.

"And you know what our position is regarding settlements... This activity has to stop. This is laid out in the roadmap. So the reports are inaccurate," Kelly said.

He added that Mitchell plans to travel to Israel soon to continue his discussions, adding that his talks with Barak on Monday had been "good, productive." He gave no dates for the planned visit.