In an effort to defuse a bitter spat with the United States, Israeli Prime Minister Binyamin Netanyahu called Secretary of State Hillary Rodham Clinton on Thursday night to propose confidence-building measures to get Middle East peace talks back on track, U.S. and Israeli officials said.

Netanyahu's proposals, while not immediately disclosed, were sufficient for the Obama administration to say that it would send special envoy George J. Mitchell back to the region on Sunday in a bid to start indirect talks between Israelis and Palestinians. Mitchell's planned trip this week was scrubbed as the Obama administration awaited Netanyahu's response to Clinton's blistering 45-minute call to the Israeli prime minister last Friday.

But the administration pointedly did not embrace Netanyahu's ideas either. "We are going to review the Prime Minister's response and continue our discussions with both sides to keep proximity talks moving forward," State Department spokesman P.J. Crowley said in a statement issued from Moscow, where Clinton is meeting with Russian officials.

Officials said that Clinton and President Obama, who jointly wrote the points for her call last Friday, were furious that Israel announced that 1,600 housing units were being planned in East Jerusalem as Vice President Biden was on a goodwill trip to Israel. Netanyahu agreed that the timing of the announcement was poor, but he has publicly maintained that Israel has a right to build in parts of Jerusalem that it annexed after the 1967 war, a move not recognized by other nations. Palestinians want to claim East Jerusalem as the capital of a Palestinian state in any peace deal.
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In the call last Friday, Clinton demanded that Netanyahu reverse the housing decision, make positive gestures to the Palestinians and agree to put the status of Jerusalem on the table during the indirect talks, U.S. officials said. Israeli officials said there was no way he could meet those demands without bringing his government down.

In the past three days, Netanyahu met for hours with his "inner cabinet," a group of seven officials who make up the most dovish and hawkish parts of his right-leaning coalition, in an effort to defuse the most serious break in U.S.-Israeli relations in two decades. The prime minister's office, in a statement Thursday, noted that all seven members of the inner cabinet supported the "confidence-building steps" he raised in his 20-minute call, suggesting that he had achieved political consensus at home. The statement stressed that the steps would be "mutual" by both Israelis and Palestinians.

U.S. officials may be reacting cautiously to Netanyahu's proposals because of inherent risks for the administration. Last year, the United States had sought a halt to all settlement activity in the West Bank -- and also in East Jerusalem -- but eventually accepted a 10-month moratorium, with caveats that excluded East Jerusalem and existing projects in the West Bank. Arab officials denounced the deal as a sham, and Palestinians refused to return to direct negotiations.

U.S. officials last year thought they had also extracted a secret promise from Netanyahu not to allow any provocative steps in East Jerusalem. One possible compromise to the current dispute would be for Netanyahu to affirm that deal, making sure there will be no further announcements of housing projects in the eastern part of Jerusalem. But it is not clear if that would be enough for Palestinian leaders, who have already demanded a halt to all construction in East Jerusalem before indirect talks can begin.

Asked how closely Netanyahu's proposals matched Clinton's demands, one senior U.S. official traveling with her said: "The score card thing doesn't quite work."

Crowley said that Mitchell will meet with Netanyahu and Palestinian President Mahmoud Abbas on Sunday. Clinton and Netanyahu have agreed to meet Monday in Washington, when the Israeli prime minister plans to address the annual conference of the American Israel Public Affairs Committee. Significantly, Netanyahu will be accompanied in Washington by Defense Minister Ehud Barak, who nearly achieved a peace deal when he was prime minister in the 1990s. The prime minister is not expected to meet with Obama, who will also be in Washington after canceling his planned trip to Asia.

On Friday morning in the Russian capital, Clinton will meet with other members of the Quartet, a diplomatic grouping that also includes Russia, the European Union and the United Nations that is mediating efforts to bring peace between Israel and the Palestinians.

The Obama administration in recent days has significantly toned down its public rhetoric on the dispute. Earlier Thursday, Clinton repeatedly refused to even say whether she had heard from Netanyahu and offered only bland comments on the administration's commitment to peace.

"They are not escalating but also not saying that this is fully behind us -- [Netanyahu] has not delivered what they asked for -- but they want to see him at least implement what he has promised and to move on to the indirect talks," said Daniel Levy, a former Israeli peace negotiator now at the New America Foundation. "He is on probation and for his part has stayed firmly within his comfort zone and avoided taking any step of consequence for peace efforts or for his own internal politics."