Israel's Benjamin Netanyahu is currently weighing plans for a fresh ban on West Bank settlement building in exchange for a package of US political and security guarantees in a move which US President Barack Obama said was "a signal that he is serious."

But the proposed 90-day freeze would only halt the construction in the West Bank and not in occupied east Jerusalem, in a formula which the Palestinians say does not go far enough.

"If Netanyahu stops the settlements, we will go back to direct negotiations," chief Palestinian negotiator Saeb Erakat told AFP, referring to a comprehensive ban on settlement construction on all occupied Palestinian land.

Obama, he said, was very much aware that the Israeli leader held the key to salvaging the peace talks.

"President Obama knows very well that Netanyahu is responsible for stopping the negotiations," he told AFP.

"He also knows very well that Netanyahu has the key to the negotiations, and that he has closed the door to negotiations and chosen settlements not peace," he said.

David Hale, assistant to US Middle East envoy George Mitchell, was to discuss the idea with Palestinian president Mahmud Abbas in the West Bank city of Ramallah later on Monday, an official source said.

Until now, the Palestinians have refused to continue talking without a fresh ban on settlement construction, a move which Israel has so far refused to consider.

The Palestinians see the settlements as a major threat to the establishment of a viable state, and they view the freezing of settlement activity as a crucial test of Israel's intentions.

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