JERUSALEM, Nov. 15 (Xinhua) -- A plan to build new housing units in Gilo, a neighborhood in southeastern Jerusalem, has been put on hold indefinitely.

Two local committees engaged in development projects in the Jerusalem area have decided to delay discussions on the plan to construct 1,300 units in Gilo, local daily Ha'aretz reported Monday.

The decision is most likely made in response to a request from the Prime Minister's Office, which seeks to avoid a head-on clash with the United States over the approval of new residential projects in disputed areas of Jerusalem, the report said.

Gilo, the former site of a Jordanian military outpost, was settled by Israel in the aftermath of the 1967 war and is currently home to about 50,000 residents.

The announcement of the planned construction in other parts of Jerusalem during Prime Minister Benjamin Netanyahu's visit to the U.S. last week led to tensions with the White House. U.S. President Barack Obama, then on a visit to Indonesia, personally voiced his concern over the plans, saying that "this kind of activity is not helpful to the efforts to resume peace negotiations."

Netanyahu's bureau responded hastily to the criticism by issuing a statement that said "Jerusalem is not a settlement. It is the capital of Israel."

But Monday's report on the deferment of plans to build in Gilo may signal that Netanyahu is taking initial steps to implement a U. S. proposal made to him by Secretary of State Hillary Clinton in New York last Thursday, in which Israel would receive an additional 20 F-35 jet fighters in exchange for extending the freeze on settlement construction in the West Bank for another 90 days.

Netanyahu convened his forum of seven senior ministers for an emergency discussion on Saturday, and presented them with details of the American offer.

The proposal raised a storm at the weekly cabinet meeting held on Sunday, with Netanyahu's right-faction ministers voicing their fierce objection to any further extension of the construction moratorium, which officially expired on Sept. 26.

Netanyahu is expected to pass the proposal by a margin of one when he brings it before his security cabinet, The Jerusalem Post reported Monday.

Obama on Sunday hailed the proposed freeze as a "very constructive step" which he said he hoped would soon bring about resumption of the stalled peace negotiations. "I think it's a signal that he (Netanyahu) is serious," he added.

But before the proposal can be set in motion, Netanyahu will face immense opposition from within his cabinet. As of Monday, seven of its members support the proposal, and six oppose it, according to the report.

The element that would tip the scale in favor of the proposal is the expectation that two ultra-Orthodox Shas ministers will abstain from voting on the matter.

But that, too, is still uncertain. Interior Minister Eli Yishai, who heads Shas, said his party would support the U.S. proposal if the 90-day extension of the moratorium would not include construction in East Jerusalem. Yishai also conditioned his support on Obama promising in writing that construction activities in the West Bank would resume in full following the end of the second freeze.

An initial draft of the proposal was produced following a seven- hour meeting between Netanyahu and Clinton on Thursday. U.S. and Israeli officials are expected to hold a series of meetings which aimed to yield a final agreement on the proposal which Netanyahu will then present his cabinet. The Arab League will also convene within days to decide on behalf of the Palestinians whether or not to accept the proposal.