The United States has reached a dead end in its attempts to revive Middle East peace talks, a senior Palestinian official said on Tuesday.

The West Bank-based Palestinian Authority has demanded a full halt to Israeli settlement building in East Jerusalem and the West Bank before any resumption of negotiations suspended since December 2008.

Saeb Erekat, the chief Palestinian negotiator, said the Palestinians wanted U.S. guarantees that Israel would not issue more tenders to build on land where the Palestinians aim to establish a state, including East Jerusalem.

Israel must also cancel plans announced last month for more building in parts of Jerusalem it captured, along with the West Bank in a 1967 war, Erekat added.

"This is what we expect," Erekat told Voice of Palestine radio.

"But it appears that all the consultations that have happened with the Israeli government and the American administration and other states have reached a dead end with Israeli positions insisting on a continuation of settlement."

Palestinian President Mahmoud Abbas had met U.S. Consul General Daniel Rubinstein on Monday, Erekat added.

Prime Minister Benjamin Netanyahu, who met U.S. President Barack Obama in Washington last month, has yet to respond formally to a U.S. demand for confidence-building steps to try to persuade Palestinians to return to peace talks.

Meanwhile, Foreign Minister Avigdor Lieberman warned the Palestinian Authority this week against plans to declare independence unilaterally next year, saying such a move could prompt Israel to annex parts of the West Bank and annul past peace agreements.

Palestinian Prime Minister Salam Fayyad, whose Western-backed government has a limited governing role in the Israeli-controlled West Bank, has announced plans to unilaterally declare a Palestinian state, possibly as early as the summer of 2011 - even without a peace deal.

Toward that aim, Fayyad has begun ambitious reforms of the government and security forces, building up Palestinian institutions and developing the economy in preparation for independence.

The international community has welcomed Fayyad's reform efforts, raising fears in Israel that a unilateral declaration of Palestinian statehood could win international recognition.

Lieberman warned that Israel would not tolerate such a step, and could revoke a series of agreements made under the so-called Oslo interim peace accords of the 1990s or even annex parts of the West Bank.

"Any unilateral decision will release us from all of our commitments and will allow us also to make unilateral decisions," Lieberman was quoted as saying by Israeli media.

"For example, imposing Israeli sovereignty on certain areas, cutting off all kinds of ties and transfers of money and a string of benefits and agreements put into place since the Oslo accords," he said.

The Palestinians claim all of the West Bank and East Jerusalem - areas captured by Israel in the 1967 Six-Day War - as part of their future state.

Peace talks between Israelis and Palestinians have been on hold since late 2008, with a new round of indirect talks being held up by a spat over Israeli construction in East Jerusalem.