Prime Minister Benjamin Netanyahu of Israel, under intense pressure from the United States to settle a diplomatic dispute over Jewish settlements, called Secretary of State Hillary Rodham Clinton late Thursday to propose what he called a package of “mutual confidence building” steps to be taken by Israelis and Palestinians to help restart peace negotiations.

The Obama administration will “review the prime minister’s response and continue our discussions with both sides,” Philip J. Crowley, the State Department spokesman, said in a statement.

Mr. Crowley declined to characterize the steps, saying there would be further discussions between Israeli and American officials in Jerusalem and Washington in the coming days.

A statement issued by the Israeli government said that Mr. Netanyahu “suggested to Secretary of State Clinton mutual confidence-building steps,” without disclosing what those might be. The proposal, the statement said, had won the unanimous support of the seven members of Mr. Netanyahu’s inner cabinet, which includes representatives of right-wing parties in his coalition.

In the past few weeks, Mr. Netanyahu has been trying to balance conservative elements of his government, which ardently favor continued settlement construction, with the Obama administration, which has pushed him to freeze all settlement construction as a way to revive peace talks.

“The goal for both sides at this moment is to put this behind us and proceed with the proximity talks, which in our view should lead to direct negotiations as soon as possible,” said Israel’s ambassador to Washington, Michael B. Oren, according to his spokesman, Jonathan Peled.

A senior administration official familiar with the conversation between Mr. Netanyahu and Mrs. Clinton described the Israeli responses as less than definitive. “It is fair to say they have come back to us and given us some ideas, and some ideas to work with,” the official said. “There are areas where we have to have some clarification, and when you get something to work with that’s a good thing.”

But the reluctance of both sides to talk about the specifics of the Israeli response seemed to reflect a desire by both sides to avoid portraying Washington and Jerusalem as engaged in a tug of war, in which the Obama administration was trying to drag Mr. Netanyahu away from the right wing of his coalition. The dispute began last week during a visit to Israel by Vice President Joseph R. Biden Jr., when an Israeli government ministry announced the construction of 1,600 housing units in the ultra-orthodox neighborhood of Ramat Shlomo in East Jerusalem. The announcement embarrassed Mr. Biden.

American anger deepened after Mr. Biden left Israel, with Mrs. Clinton calling Mr. Netanyahu to warn him that the episode could undermine the United States-Israel relationship and to demand that his government take specific steps to advance the peace process.

These included reversing the Ramat Shlomo project, freezing other building projects in East Jerusalem and pledging to enter into substantive negotiations with the Palestinians over fundamental issues when the United States begins mediating indirect negotiations, which are known as proximity talks. Israel had wanted to focus only on procedural issues.

There will be a flurry of diplomacy over the next few days, as both sides try to extricate themselves. The administration’s special envoy, George J. Mitchell, plans to travel to the Middle East this weekend to meet with Mr. Netanyahu and the Palestinian president, Mahmoud Abbas.