Israeli Prime Minister Benjamin Netanyahu has ordered a freeze on tenders for new West Bank settler homes, a report said Tuesday, with a rights group confirming not a single tender has been issued in months.

The decision was taken in a bid to avoid hampering US efforts to renew peace talks with the Palestinians, Israel's army radio reported.

Although the prime minister's office refused to confirm or deny the report, settlement watchdog Peace Now confirmed there had not been any tenders published since the start of the year.

At issue is a pledge by Netanyahu late last year to forge ahead with thousands of new settler homes that was made in retaliation for the Palestinians winning upgraded UN status in November, in a step which angered Israel.

Netanyahu communicated news of the tender freeze to Housing Minister Uri Ariel a few days ago in a move linked to efforts by US Secretary of State John Kerry to relaunch peace talks, the radio said.

Unnamed Israeli officials quoted by Haaretz newspaper said Netanyahu had promised Kerry he would "rein in" construction of settlements until mid-June.

But the Palestinians dismissed the report, with negotiator Saeb Erakat saying they had not been made aware of any changes in Israel's settlement activity.

"We have not been notified of any changes to Israel's colonial plans, including ongoing construction in dozens of Israeli settlements in the occupied state of Palestine," he said in a statement.

Housing Minister Ariel, who is himself a settler and number two in the pro-settlement Jewish Home party, refused to confirm or deny the report, telling the radio: "I have no intention of revealing details of my discussions with the prime minister."

The tenders put on hold are related to construction in the major settlement blocs that house most of the 360,000 Israelis living in the West Bank.

Ayelet Shaked, another Jewish Home MP, said the minister had "prepared thousands of tenders for construction in Judaea and Samaria" -- the biblical term for the West Bank.

But she said the tenders "must be signed by the prime minister and for some reason it hasn't happened".

Peace Now's Hagit Ofran told AFP the watchdog had seen "no new tenders published for settlement construction in the West Bank since the start of the year" that are "normally issued every three months".

"This is not a settlement freeze because construction in the settlements is continuing, but you could say it is a show of restraint by Netanyahu," she said.

Netanyahu is likely to face fierce opposition from his housing minister.

Ariel had warned during an April 30 meeting with Netanyahu that Jewish Home would oppose the 2013 state budget unless it contained money for further construction, Israel HaYom newspaper reported last week.

"I explained to (Netanyahu) that if the 2013 budget does not contain funding for the construction projects" that were approved after the UN bid, "Jewish Home will... oppose the budget until the promised funding solution is found," he told the paper.

The budget is to be presented next week.

Jewish Home and hardliners from Netanyahu's Likud had been anticipating a new bout of construction after the January elections which saw former defence minister Ehud Barak replaced by Moshe Yaalon, another ardent settlement advocate.

The defence minister also plays a key role in advancing settlements, with the power to approve new construction and to sanction the removal of unauthorised settler outposts.

Direct peace talks broke off in late September 2010 after Israel refused to renew a freeze on settlement construction.

Since then, the Palestinians have said they will not return to negotiations while Israel continues to build on land they want for a future state.

Israel has said it is ready for an immediate resumption of talks, but insists it will only talk if there are no such pre-conditions.