Barack Obama, US president, will host a meeting between Israeli and Palestinian leaders in New York tomorrow, seeking to break the Middle East stalemate after a troubled week for US diplomacy in the region.

A weekend statement from the White House that Mr Obama would chair a joint session with Benjamin Netanyahu, the Israeli prime minister, and Mahmoud Abbas, the Palestinian Authority president, came after the failure of both sides to budge on the issue of Israeli settlement activity had threatened to scupper the encounter.

But the meeting will fall short of expectations of a three-way summit to restart peace talks and will focus, in the words of Robert Gibbs, White House spokesman, on encouraging all sides "to take responsibility for peace and to create a positive context for the resumption of negotiations".

Mr Obama will meet the leaders separately before the joint session. All three will be in New York for the annual high-level session of the United Nations General Assembly.

In a week of shuttle diplomacy, George Mitchell, the US special envoy to the region, failed to secure Israeli agreement to a freeze on settlement activity in the West Bank and East Jerusalem that would be any more than limited and temporary. Israel announced construction of housing units in occupied territory just days before the start of the Mitchell mission.

The Obama administration supports a total settlement freeze, which is an element of the 2003 Middle East "road map", and Mr Abbas had made it a condition for meeting Mr Netanyahu. On Friday, diplomats at the UN had speculated that the best the US could hope for was to engineer a "chance" encounter between the Israeli and Palestinian leaders in the margins of the General Assembly session.

Mr Netanyahu's office welcomed the invitation to the trilateral talks. Nabil Abu Rdaineh, Mr Abbas's spokesman, insisted the meeting did not constitute the resumption of peace talks. Analysts said it would have been difficult for either side to boycott a meeting and thereby take the blame for undermining Mr Obama's peace efforts.

"It's problematic for the Palestinians and painful for Abbas after his insistence on [the freeze in] settlements," said Hussein Ibish of the American Task Force on Palestine.

"But it's in the Palestinians' interests not to weaken Obama's hand. It's better for Abbas to take the political hit rather than committing the diplomatic blunder of embarrassing Obama."

Mr Netanyahu stands to lose little credit domestically as he will be going into the New York meeting without pre-conditions. Analysts said he might even benefit at home for having stood up to the demands of a US president Israelis regard as less supportive of Israel than his predecessors.

But Mr Obama has the advantage of a largely supportive Congress in pursuing his efforts to get the sides together. Even prominent supporters of Israel such as Gary Ackerman, a Democratic New York congressman, favour a settlement freeze.

The Obama strategy hinged on persuading Israel to accept a freeze that would be matched by modest gestures by Arab states towards initiating ties with Israel. Arab governments proved reluctant, however, to agree in advance to reciprocal confidence-building measures such as allowing Israeli civil aircraft to fly over their territory.

Daniel Kurtzer, a former US ambassador to Israel, told a liberal Jewish audience in New York last week that the US should not be just a "caterer or convener" for the peace process and urged Mr Obama to formulate his own agenda.