U.S. and Israeli officials struggled Wednesday to resolve a sharp dispute over U.S. demands that Israel make goodwill gestures to lure Palestinian officials back to the negotiating table.

Visiting Israeli Prime Minister Binyamin Netanyahu, who held two hours of talks with President Obama on Tuesday night, cleared his schedule Wednesday to undertake additional negotiations with senior U.S. officials, including special peace envoy George J. Mitchell and White House adviser Dennis Ross. The prime minister, who was to leave Washington late Wednesday, also went twice to the Israeli Embassy to talk securely with officials back home about the negotiations.

U.S. and Israeli officials are working on a document dubbed "the blueprint," which covers all issues, including Jerusalem, that need to be resolved to let talks go forward. Netanyahu will attempt to sell it to his cabinet while Mitchell will take it to Arab and Palestinian officials for approval.

Netanyahu's talks with Obama were shrouded in an unusual news blackout, with no statement issued after the meeting and no official photographs released. U.S. officials said that the two men met one-on-one at the White House for about 1 1/2 hours. Netanyahu then huddled with his senior staff in the Roosevelt Room for a further 1 1/2 hours before requesting a second meeting with Obama. The president returned from the White House residence, and Netanyahu is said to have made some kind of counteroffer in that half-hour meeting that did not meet with U.S. acceptance.

"There are areas that they discussed last night, some of which they agree and some of which they disagree," White House press secretary Robert Gibbs told reporters, declining to discuss details. "The conversation was honest and straightforward."

Ever since the administration was blindsided by Israel's March 9 announcement that it intends to build 1,600 housing units in a disputed area of Jerusalem, U.S. officials have pressed Israel to take actions to encourage Palestinians to attend indirect talks, including canceling the project, making concrete gestures such as a prisoner release and adding substantive rather than procedural issues to the agenda for talks. Some U.S. requests have not been made public.

Gibbs made no apologies for the low profile of the Netanyahu visit, which appeared to be the diplomatic equivalent of taking the Israeli leader to the woodshed. "We've handled different visits in different ways, and this is the way we felt most comfortable handling this one," Gibbs said.

As Obama met with Netanyahu, news leaked in Israel that approval had been given to construct 20 additional housing units in East Jerusalem, in the Palestinian neighborhood of Sheikh Jarrah. The United States had previously objected to the project, which would be built on the site of the Shepherd Hotel, the former home of the late Haj Amin Husseini, a former mufti, or Islamic law scholar, of Jerusalem. It is now owned by Florida developer Irving Moskovitz.

Reports from Israel differed on the significance of the new approval, and U.S. officials said they were seeking "clarification" from the Israeli government. Netanyahu has defended Israel's right to build in East Jerusalem, which Israel annexed in 1967 in an act not recognized internationally, but the Obama administration has urged him to ensure that housing projects there do not spoil the atmosphere for talks.

Netanyahu has repeatedly said he is interested in direct talks with the Palestinians. They have refused to attend, saying he is not serious about negotiating.