Palestinians have threatened to pull out of the face-to-face peace talks with Israel, due to begin on Thursday in Washington, unless Israel extends a moratorium on West Bank settlement building.
Palestinian President Mahmoud Abbas said Israel would be to blame for the failure of a new round of peace talks if it continues settlement expansion on occupied land.
Mr Abbas, in a televised speech, said 'Israel alone will bear the responsibility of threatening these negotiations with collapse and failure if it continues settlement expansion in all its forms in all the Palestinian lands occupied since 1967.'
Israel imposed a 10-month, partial freeze on settlement building in the West Bank last November. The decision, taken under US pressure, was designed to coax the Palestinians back to peace talks.
But the moratorium was deemed inadequate by Mr Abbas because it excluded West Bank land annexed by Israel to Jerusalem municipality in 1967.
Israeli Foreign Minister Avigdor Lieberman says there is virtually no chance of reaching a peace deal within the one-year target set by the US on Wednesday voiced confidence the Israeli cabinet would not extend the freeze.
Israeli Vice Premier Silvan Shalom told Reuters that the cabinet would vote on the issue only after the Jewish High Holidays later this month, which fall after the summit date.
Dan Meridor, a moderate in the Israeli cabinet, has proposed resuming construction only in major settlement blocs that Israel intends to keep in any future peace deal, which could include territorial swaps.
Palestinians have rejected that idea, which they say would amount to accepting Israeli sovereignty over the blocs.
Earlier, the US State Department condemned as 'deeply offensive' remarks by an influential Israeli rabbi who said he hoped Palestinian leader Mahmud Abbas would 'vanish from our world.'