Confusion over a potential deal between Israel and the United States for a new settlement freeze continued Wednesday, with Prime Minister Netanyahu offering seemingly contradictory versions of talks between the allies.

Netanyahu's bureau on Wednesday morning put out a statement denying that negotiations had brought up the prospect of extending the West Bank building moratorium to East Jerusalem.

"Discussions with the United States to formulate a memorandum of understanding did not tackle the issue of Jerusalem," the statement said.

But the government's latest position appears at odds with Netanyahu's comments on Saturday, when he told his seven-strong inner cabinet that he had assurances from U.S. Secretary of State Hillary Clinton that East Jerusalem would not be covered by a new freeze.

Israel's previous moratorium on West Bank construction did not include the eastern half of the city, annexed by Israel in 1980 but claimed by the Palestinians as their future capital. That freeze expired on September 26, throwing peace talks into jeopardy and prompting the U.S. to offer Israel incentives including 20 stealth warplanes in exchange for a new 90-day suspension.

Jerusalem officials said Wednesday that the ambiguity arose because although draft documents made no direct reference to Jerusalem, Netanyahu had promised ministers that any new freeze would be enforced on the same terms as the old one. This allowed Netanyahu to present a "rosy picture" of U.S. guarantees, one senior official said.

Meanwhile, the cabinet continued to delay a vote on the deal, demanding clarification of the U.S. position on East Jerusalem and whether Clinton will demand another freeze as soon as the 90 days are over.

And as the wrangling continued, simmering dissent within Netanyahu's Likud party turned into open revolt, with several of the party's leading MKs, including at least two ministers, reported to have signed a letter to the prime minister rejecting the freeze.