Israeli Prime Minister Benjamin Netanyahu is engaging the US administration in a high-profile debate over settlement building two days before he meets Secretary of State Hillary Clinton to address the impasse in negotiations.

For Mr. Netanyahu, the very public spat – the first in months – may be a way of girding himself before agreeing to a new freeze of settlements in the West Bank, a move that would infuriate his hard-line critics.

"Assuming Netanyahu will soon reach some kind of a compromise with the administration about a continued freeze in the West Bank, he wants to make sure to neutralize criticism ... [over] a freeze in Jerusalem," says Shmuel Rosner, a commentator for Maariv. "If Jerusalem is on the table, the [right-wing] opposition will have more ammunition with which to attack him."

Though East Jerusalem was not part of Israel's 10-month settlement freeze that ended Sept. 26, the government had observed a de facto freeze on major building and development in parallel with the West Bank moratorium.

On Friday, however, Israel publicized plans to build more than 1,300 new housing units in East Jerusalem. The new plans, which went unnoticed until Monday, prompted an unusual on-the-record volley of disagreement between the US and Israel on Tuesday.

After President Obama criticized the move during his visit in Indonesia, Netanyahu's office released a sharp note insisting that Israel would continue building in territory it considers part of its capital, and that doing so has never affected peace talks. Within hours the State Department's spokesperson responded by asserting the opposite.

Israel claims East Jerusalem, which it annexed after capturing it in the 1967 war, as part of its "eternal and undivided" capital and thus does not consider Jewish communities to be "settlements." Palestinians and the international community, who see East Jerusalem as occupied territory and the future capital of an eventual Palestinian state, see Jewish building there as prejudicing peace talks and illegal under international law.

Netanyahu knew of the 1,300 approved units

Zvi Hauser, a spokesperson for Netanyahu, told Israel Radio on Wednesday morning that the prime minister knew of the new approvals for some 1,300 new housing units in the Jewish neighborhoods of Har Homa and Ramot, located in areas incorporated into the city when the borders of Jerusalem were dramatically expanded after 1967 to buttress the Israeli military's hold on the city.

The publication of the approvals just as Netanyahu visited with Vice President Biden in New Orleans on Sunday upset the Obama administration, recalled a similar incident on Biden's March visit to the region.

After the escalation Tuesday, Mr. Hauser attempted to play down the dispute as exaggerated by the Israeli and international media.

"The dispute between US and Israel over building in Jerusalem is 40 years old," he said. "This bilateral dialogue is much more moderate than the headlines."

Hard-line allies praise Netanyahu for standing up to US

Netanyahu is already being praised by hard-line allies for standing up to the Obama administration. Danny Danon, a parliament member from the prime minister's party said in a statement, "President Obama has apparently not yet internalized the results of last week's election in the United States."

The US is trying to persuade Israel to agree to a new two- to three-month settlement building freeze, and Israel is believed to be seeking to improve a US package of security guarantees to help sell the proposal.

But after the publication of new building in Jerusalem, some commentators believe that Obama needs to more move more forcefully in persuading Israel to accept a new freeze. Gershon Baskin, the director of the dovish Israel Palestine Center for Research and Information, says that after the Congressional loss, Israel's actions on Jerusalem is undermining the president's standing.

"The US has already used carrots with Israel and now it has to get the sticks out of its tool box" on the freeze, he says. "These actions of going head-to-head with Obama weaken Obama in the US and the world."