Palestinian officials on Sunday criticized the United States for what one called "backpedaling" on demands that Israel stop settlement construction in the occupied West Bank, saying the Obama administration's change of approach on the issue damaged the likelihood of a peace agreement.

"If America cannot get Israel to implement a settlement freeze, what chance do the Palestinians have of reaching agreement" on the even more complex set of issues involved in final peace talks, chief Palestinian negotiator Saeb Erekat said in a written statement.

"We are at a critical moment," Erekat said. "The way forward, however, is not to drop the demand for Israel to comply with its obligations."

The U.S.-mediated peace process, overseen by special envoy George S. Mitchell, is "in a state of paralysis, and the result of Israel's intransigence and America's backpedaling is that there is no hope of negotiations on the horizon," said Nabil Abu Rudaineh, a spokesman for Palestinian Authority President Mahmoud Abbas, speaking to local reporters.

The comments represent what has been a shift in the dynamics since President Obama took office, with initial pressure on Israel giving way to apparent impatience over the refusal of Palestinian officials to resume peace talks in the absence of a settlement freeze.

The first months of Obama's administration were marked by sharply worded demands that Israel stop building in both the West Bank and East Jerusalem. Palestinians consider the areas part of a future Palestinian state and say that a halt to settlements on Israel's part would simply be fulfilling promises already made under previous international agreements. The United States and much of the international community consider the West Bank settlements, home to about 300,000 Israelis, contrary to international law and an impediment to a final peace agreement between the two sides.

Although Israeli Prime Minister Binyamin Netanyahu rebuffed the initial U.S. demand, he also offered alternatives that, while short of what the Palestinians wanted, were still characterized by Secretary of State Hillary Rodham Clinton over the weekend as "unprecedented" concessions made in hopes of helping direct talks resume.

Netanyahu, at the start of a weekly cabinet meeting, said on Sunday that he hopes the Palestinians will "come to their senses" and start negotiations without preconditions. Previous direct peace talks have been held between the two sides even as settlement construction continued.

However, Obama's election raised expectations among Palestinians and throughout the Arab states that the peace process would yield quicker results from an administration willing to openly criticize Israel and, it seemed, elevate Palestinian interests.

The settlement freeze has become central to those perceptions. Both Egypt and Jordan on Sunday issued statements backing Abbas's position that talks cannot resume until settlement construction is stopped.