The United States nudged the Palestinian Authority to make a counter-offer to Israel's proposal for a new freeze on building in Jewish settlements if the Palestinians recognized Israel as a Jewish state.

Israeli Prime Minister Benjamin Netanyahu on Monday said if the Palestinian leadership recognized Israel "as the homeland of the Jewish people," he was ready to ask his government to extend a freeze on West Bank settlement building.

The Palestinians immediately rejected the proposal, which they have long opposed.

The deadlock deepened doubts over the chances of resuming U.S.-brokered talks that stalled last month after Israel refused to extend a 10-month moratorium on housing starts in Jewish settlements in the occupied West Bank. The Palestinians have refused to resume talks unless the freeze continues.

The Palestinians argue that recognizing Israel as a Jewish state effectively gives up any right of return for Palestinian refugees who fled or were forced from their homes in Arab-Israeli wars to return to territory that is now Israel.

They also argue it would compromise the rights of Arab citizens of Israel who make up 20 percent of the population.

Palestinians view settlements, on land Israel occupied in a 1967 war, as an obstacle to the establishment of a viable and contiguous state.

Speaking in Washington, U.S. State Department spokesman P.J. Crowley made clear Washington wanted the Palestinians to make some kind of counter-proposal to Netanyahu.

"Prime Minister Netanyahu has offered his thoughts on both what he's willing to contribute to the process, what he thinks he needs for his people out of the process, we would hope that the Palestinians would do the same thing," he told reporters.

The spokesman also offered support for Netanyahu's stance, saying the United States regarded Israel as a Jewish state.

"We recognize that Israel, you know, is a -- as it says itself -- is a Jewish state," Crowley said.

U.S. officials have long spoken of the Jewish character of Israel and U.S. Secretary of State Hillary Clinton in March said the Israeli-Palestinian conflict "threatens Israel's long-term future as a secure and democratic Jewish state."

Crowley said the United States was trying to find a formula to overcome the settlements impasse and to allow the two sides to resume direct negotiations. The talks began in Washington on Sept. 2 but there were only three face-to-face sessions before the building freeze expired.

U.S. special envoy George Mitchell was expected to return to the region soon and Assistant Secretary of State for Near Eastern Affairs Jeffrey Feltman will visit Egypt, Saudi Arabia, Morocco and France from Oct. 13 to 22, the State Department said.