Palestinians held fast on Tuesday to their threat to quit peace talks with Israel if settlement building does not cease, giving a U.S. Middle East envoy a final chance to try to save the negotiations.

"Of course we don't want to end negotiations, we want to continue. But if colonization continues we will be forced to end them," Palestinian President Mahmoud Abbas told Europe 1 radio.

"We will wait until after a meeting between Palestinians, and an Arab forum meeting on Oct. 4 ... So (Israeli Prime Minister Benjamin) Netanyahu has a week to decide," said Abbas.

U.S. President Barack Obama's Middle East envoy, George Mitchell, was due to meet Israeli Defence Minister Ehud Barak later in the day in Tel Aviv. He was also expected to hold talks with Netanyahu and Abbas over the next several days.

A 10-month moratorium on housing starts in Israeli settlements in the occupied West Bank expired on Monday after Netanyahu rebuffed calls by Obama and other foreign leaders to
extend it.

The collapse of a peace process launched at the White House only four weeks ago would be a major political embarrassment for the U.S. leader, who faces the prospect of losses by his
Democratic party in congressional mid-term election on Nov. 2.

"The president (Abbas) wants to listen to Mitchell," Palestinian negotiator Nabil Shaath told Reuters. Maybe the Israelis will reassess their position and see the whole world is against the continuation of settlement activities."

Shaath said that "in reality, there are no negotiations" at present, echoing comments made on Monday by a U.S. State Department spokesman.

"There will be no negotiations until Israel halts settlements," Shaath said. "We want to give the Israelis and the Americans a few days (to resolve the issue)."