An announcement that Israelis and Palestinians have agreed to go into direct peace talks is expected in the coming days, U.S. officials, Mideast watchers and European diplomats said Monday.

“We are close, we are optimistic,” a U.S. official said. “There’s still work to do, details remain.”

One western diplomat said the announcement was expected Monday, adding that both parties are essentially agreeing to go into direct talks based on assurances they have received from the United States.

U.S. officials said they were still focused on getting both parties to agree, and would not say where talks, expected to start by Sept. 1, might be held.

Middle East watchers believed talks would be announced this week despite the reported rejection Sunday by the Israeli cabinet of a statement from the so-called Middle East Quartet -- comprised of the U.S., Russia, United Nations and European Union – as the basis for direct talks. The Israeli daily Ha'aretz reported that the cabinet said the Quartet statement on a two-state solution included unacceptable preconditions concerning how much land Israel would be expected to cede to a future Palestinian state.

The Obama administration is believed to have received private assurances from Israeli Prime Minister Benjamin Netanyahu that should the Palestinians agree to go into direct talks by the end of the month, then Israel would extend a partial moratorium on West Bank Jewish settlement construction currently due to expire in September.

“I think everyone knows [direct talks] are going to happen,” said the American Task Force for Palestine’s Hussein Ibish. “There’s a sense of urgency about [securing agreement for direct talks] by the end of August because the settlement moratorium [expiration] starts kicking in [after that] and they don’t want [that issue] to come back.”

Any such understandings on restraint on settlement activity and other confidence building measures between Washington and Jerusalem have “to be implicit and under the table,” Ibish continued. “It’s all based on what you do, and not on what you say.”

“There are limits” that have been agreed, however, “and it’s been communicated to the Palestinians that it’s a quid pro quo, they have to come back to direct negotiations … and they know that.”

“Direct talks will take place,” veteran U.S. Middle East peace negotiator Aaron Miller said. “The Palestinians are looking desperately for additional cover. Netanyahu is determined to ensure they don't get too much.”