Israeli Prime Minister Benjamin Netanyahu was to convene his inner forum Friday in a bid to craft an Israeli response to mounting pressure from the United States, officials said.

A tight-lipped Netanyahu returned home Thursday after a tense visit to Washington that appeared to deepen a bitter row with the administration of US President Barack Obama over the building of Jewish settlements.

The Americans have reportedly given Netanyahu a series of demands needed to kickstart moribund peace talks with the Palestinians.

Netanyahu will meet his inner forum of seven senior ministers to draw up Israel's response to Washington, Cabinet Secretary Zvi Hauser told public radio on Friday, denying media reports the US had given Israel a deadline.

"I suggest you wait patiently. The forum of seven is meeting today in the afternoon to discuss things. If there is a necessity for further discussions they will happen," Hauser told the radio.

"All aspects of the issue will be examined and they will formulate Israel's position according to Israel's interests and in the time needed to do so," he said.

Hauser declined to discuss the details of Washington's demands, in line with the laconic stance adopted by both sides.

Analysis:US standing firm in row with Israel

There was an unusually opaque news blackout throughout the visit, no concrete achievements were reported and the Israeli leader was given none of the trappings usually reserved for visitors such as photo op and press conference.

Still, late Thursday both sides tried to put a more positive spin on what has been called the worst crisis between the allies in decades.

Israeli government spokesman Nir Hefetz insisted Israel and its closest ally had edged closer to an understanding.

"There was progress; there is a narrowing of the gaps between the positions of Israel and the positions of the United States on this issue," he told Israel's Channel Two TV.

"We are making progress on important issues," White House spokesman Robert Gibbs said as President Obama flew to Iowa on Air Force One.

The spat erupted after Netanyahu's government announced 1,600 new housing units for annexed, largely Arab, east Jerusalem as US Vice President Joe Biden was in the region earlier this month hoping to promote peace talks.

The Palestinians see east Jerusalem as the capital of their promised state, and refuse to meet Netanyahu face-to-face without a complete freeze of settlement construction in the occupied territories.

In Washington, Defence Secretary Robert Gates said Israeli-Palestinian tensions -- which the US administration had hoped to ease -- are affecting Washington's national security interests.

"The lack of progress toward Middle East peace is clearly an issue that's exploited by our adversaries in the region," he said.

Before flying home, Netanyahu cancelled planned interviews with reporters after none of the customary photo opportunities with US officials or any formal statements with them.

Media reported that Netanyahu's carefully coordinated dressing down was accompanied by demands for wide-ranging measures including the extension of a partial settlement halt and the release of hundreds of Palestinian prisoners.

Gibbs described the discussions as "honest and straightforward," a diplomatic euphemism hinting at tensions, after Netanyahu entered the talks having laid down a hard line on settlement construction in east Jerusalem.

Netanyahu on Tuesday said US demands for a settlement freeze could delay the resumption of Middle East peace talks for a year, a day after a fiery speech in which he said: "Jerusalem is not a settlement."