JERUSALEM, Sept 24 (Reuters) - Israel urged the Palestinians on Friday not to abandon recently resumed peace negotiations over the imminent expiry of a West Bank settlement moratorium, saying any new construction projects would be limited in scope.

The scheduled end on Sunday of the 10-month partial halt to building in Jewish settlements has drawn Palestinian threats to quit the talks sponsored by U.S. President Barack Obama, who has repeatedly called on Israel to extend the freeze.

Obama renewed his appeal from the rostrum of the United Nations General Assembly on Thursday, raising pressure on the Jewish state.

Israeli Prime Minister Benjamin Netanyahu, whose rightist coalition government includes pro-settler parties, has so far deflected these pleas. But he has also said renewed construction in the settlements might be on a reduced scale.

Netanyahu was in contact with U.S. and other world leaders, and had envoys working with the Americans, as part of "intensive efforts to find a mutually agreed compromise to the issue of the moratorium ending," an Israeli official said on Friday.

"If this is going to work, it must be a two-way street," the official said. "It also has to be said that the plan for building in the West Bank in the coming year is so modest that in no way would they impact on the parameters for a peace deal."

The official, who declined to be named, would not elaborate on what Israel had offered to, or asked of, the Palestinians in recent contacts.

Among stop-gap ideas floated by Israeli officials has been resuming full construction in settlement blocs which the Jewish state would eventually annex, while scaling back projects in isolated settlements. Another has been for Israel to ration approval for new buildings de facto, without a formal freeze.

Officials close to the talks said last week that Netanyahu had turned down a proposal to extend the moratorium by 3 months.

OBAMA SAYS TALKS SHOULD CARRY ON

The Palestinians want the West Bank as part of their future state and say all settlement construction must stop because the projects prejudge future borders. The World Court regards the settlements, built on land occupied in the 1967 war, as illegal.

Netanyahu's office quoted him in a statement as saying that continued settlement construction had not blocked previous rounds of Israeli-Palestinian negotiations dating back to 1993.

Neither did those talks always include a condition set by Netanyahu and rejected by the Palestinians -- that they recognise Israel as a Jewish nation-state.

"If the Palestinians want peace, they will stay in the talks with us, in order to reach a framework agreement within a year," Netanyahu said. "I hope the Palestinians will not leave the talks and will not turn their back on peace."

Addressing the U.N. General Assembly on Thursday, Obama envisaged the foundations of a Palestinian state being in place in a year and said: "We believe that the moratorium should be extended ... We also believe that talks should press on until complete."

Palestinian President Mahmoud Abbas welcomed Obama's words.

"The president (Abbas) expressed his full readiness to cooperate with the American efforts to make the peace process succeed," the official Palestinian news agency WAFA said. (Additional reporting by Ali Sawafta in Ramallah; Editing by Crispian Balmer and Paul Taylor)