The discussions "focused on creating the conditions for the resumption of direct negotiations aimed at producing a two-state solution," they said in a joint statement.

"Their teams will work closely together in the coming days toward that end," said the statement, issued after more than seven hours of talks in New York.

The statement said the two had agreed on "the importance of continuing direct negotiations," but it gave no clue as to how they intend to break the deadlock over Jewish settlement building in the West Bank and east Jerusalem.

Direct peace talks ground to a halt in September shortly after their launch when a 10-month Israeli moratorium on West Bank settlement construction expired.

The Palestinians are refusing to talk to the Israelis until the settlement ban is reimposed.

Ahead of the talks, President Barack Obama and Clinton led global criticism of Israel's latest plans to build 1,300 houses in occupied east Jerusalem, where the Palestinians want to form the capital of their future state.

This week's announcement prompted Palestinian president Mahmud Abbas to call on the United Nations Security Council to urgently debate Israeli settlement building, again complicating the US task.

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