Israel found itself at odds with its two most stalwart allies on Tuesday as Prime Minister Benjamin Netanyahu culminated a tense visit to Washington with a face-to-face session with President Obama that apparently failed to resolve the impasse between the two over a comprehensive Middle East peace plan.

Prime Minister Benjamin Netanyahu of Israel on his way into the White House on Tuesday. His tense visit to Washington lacked the usual trappings of a visit by the head of a government.
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Even as Mr. Netanyahu met with Mr. Obama at a session during which the White House pointedly withheld the usual trappings of a visit by the head of a government, Israel’s other ally, Britain, expelled an Israeli diplomat. It was a rare move by a friendly government, meant as a rebuke for what appeared to be the use of a dozen fake British passports by assassins suspected of being Israeli agents in the killing of a Hamas official in Dubai.

“Such misuse of British passports is intolerable,” the British foreign secretary, David Miliband, said in the House of Commons. “The fact that this was done by a country which is a friend only adds insult to injury.”

The British decision was the latest turn in Israel’s recent frictions with its closest allies. It comes as Mr. Netanyahu, struggling to balance diplomacy with a fractious domestic political alliance that put him in power, has seen a cooling of ties with the United States after his government’s decision this month to approve new Jewish settlements in East Jerusalem.

While White House officials said that they were seeking to put the two weeks of public fighting behind them, several administration officials acknowledged that a larger confrontation was looming as Mr. Obama sought to make good on his promise to pursue a peace plan between Israelis and Palestinians.

Mr. Netanyahu finds himself at odds with the United States and Britain partly because of the coalition he is having to manage at home. He has personally moved even farther to the right, while driving a political alliance with even more conservative elements. But some analysts say that Mr. Netanyahu has more leeway than it appears, that he could build a more centrist coalition if he chose to.

Meanwhile, both Britain and the United States have become increasingly frustrated with these Israeli political currents, with officials in both countries expressing doubts about whether such a conservative alliance could ever move forward on a peace plan.

Mr. Netanyahu’s difficult position was on display during an unusually testy visit to Washington. He and Mr. Obama did not appear side by side before reporters or even pose for cameras before their meeting.

Just hours after delivering a defiant speech in which he told a pro-Israel lobby that “Jerusalem is not a settlement; it’s our capital,” Mr. Netanyahu refused to budge on an American demand that he reverse a housing plan in the Ramat Shlomo neighborhood in East Jerusalem.

He did pledge to adhere to more rigid controls over announcements of construction in East Jerusalem, carrying from meeting to meeting here a diagram that he said laid out how much red tape Israelis must go through before they could expand housing there.

But it remained unclear whether he would even allow scheduled negotiations with the Palestinians to focus on substantive issues like borders and security, another American demand.

The impasse leaves Mr. Obama in the same position that he was in last fall, when Mr. Netanyahu defied American demands for a full freeze on settlements in the West Bank, causing the White House to set that issue aside as a first step toward restarting Middle East peace talks.

But this time, White House officials and even many Middle East analysts say that Mr. Obama, by allowing the dispute over the East Jerusalem construction to spill over publicly, has laid down a marker signaling that the United States is likely to press Israel hard on Jerusalem in future peace talks with the Palestinians. Palestinians want East Jerusalem as the capital of their eventual state.

Still, both the Obama administration and Israeli officials are trying to lower the temperature.

“The prime minister has a great deal of respect for the president, and is looking forward to working with him in the future,” Ron Dermer, a senior adviser to Mr. Netanyahu, said in an interview on Tuesday.

But Mr. Obama was furious when Israel announced the housing construction in East Jerusalem two weeks ago just as Vice President Joseph R. Biden Jr. was in the country for a visit meant to mend ties and jump-start indirect talks with the Palestinians, officials said.

While the two countries are now trying to put the fight behind them, “the writing is on the wall that Mr. Obama and Mr. Netanyahu” and the Israeli political right with whom he has formed a governing coalition “are going to clash on final status,” said Robert Malley, the director of the Middle East program at the International Crisis Group, referring to the entrenched issues like Jerusalem and borders that have bedeviled peace negotiators since 1979.
In Britain on Tuesday, a host of lawmakers used harsh language to excoriate Israel on the floor of Parliament, calling for the expulsion of the Israeli ambassador, urging criminal prosecution of those involved in the Dubai operation and going so far as to say that Israel was becoming a “rogue state.”
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The Israeli government was shaken by the expulsion but chose to issue only a curt official expression of regret and to take no countermeasures against Britain, top officials said, speaking on the condition of anonymity because they were not authorized to talk publicly.

“The relationship between Israel and Britain is mutually important,” Yigal Palmor, the Foreign Ministry spokesman, said by way of official reaction. “We therefore regret the British decision.”

Other officials suggested, however, that Britain should have let the issue of the forged passports die quietly, out of friendship and the shared goal of fighting radical Islamists. The fact that it chose to pursue the case and to take the very public step of expelling a member of the Israeli diplomatic mission in London showed ill will, they said.

In his remarks, Mr. Miliband, the foreign secretary, refused calls from British lawmakers to identify the expelled Israeli official by name or title, or to say how he was connected with the faked passports. But he said that “a state intelligence service” was most likely behind the forgeries, apparently a reference to the Mossad, Israel’s spy agency.

British news reports speculated that the diplomat being ordered to leave was the London station chief of Mossad.

Officials in Dubai have accused Mossad of being behind the Jan. 20 killing of the Hamas operative, Mahmoud al-Mabhouh, in a luxury hotel room there.

The Dubai officials say they have identified at least 26 suspects of what has been called an Israeli hit squad that traveled to Dubai on fake identities and forged British, Irish, French, German and Australian passports. Interpol has issued a wanted list of 27 people in connection with the killing.

Israel has neither confirmed nor denied involvement in Mr. Mabhouh’s killing, but Israeli officials have described the Palestinian as an important figure in Hamas terrorist operations against Israel and have said that he was deeply involved in smuggling arms for the Hamas government in Gaza.

On Tuesday, the Israeli foreign minister, Avigdor Lieberman, told reporters in Brussels that Israel had been presented with no concrete proof regarding its connection to the forged passports, but he did not go so far as to deny Israel’s role.

Mr. Miliband, himself the son of Jewish immigrants, emphasized the importance of relations between Israel and Britain on Tuesday and said the uproar over the forged passports should not be used to weaken ties between the countries.