U.S. Secretary of State Hillary Clinton offered Prime Minister Benjamin Netanyahu Thursday a security package including 20 F-35 fighter jets in exchange for a three-month settlement construction freeze when the two met last week.

The meeting, which took place in New York, lasted seven hours. Netanyahu has yet to answer Washington's demands and the talks produced no breakthrough.

Washington is reportedly also asking Netanyahu to clarify what percentage of the West Bank he is willing to withdraw from to make way for a future Palestinian state. The United States wants Netanyahu to agree to begin intensive negotiations over final borders of a future Palestinian state when peace talks resume.

An Israeli source briefed on the meeting said the Americans are now making two main demands of Israel: starting a new building freeze in the West Bank and pledging to immediately discuss borders of a future Palestinian state.

According to the proposal Clinton gave Netanyahu Thursday, Israel would declare a 90-day freeze on all new construction in the West Bank settlements.

The freeze would not include construction in Jerusalem and the United States would pledge not to ask for another extension to the freeze.

In exchange, the administration would ask Congress to approve 20 advanced F-35 aircraft to Israel, at a cost of $3 billion. If Israel signs an agreement with the Palestinians, the U.S. would sign a separate, extensive security agreement with Israel.

Discussions of the possible security agreement between Israel and the United States are to begin in the coming days.

Netanyahu and Clinton met for two hours alone, took a break for consultations with aides and then renewed the meeting together with their advisers.

Yesterday, Netanyahu reported to the seven senior cabinet ministers on his talks with Clinton. He will update the rest of the cabinet at today's weekly meeting.

Talks over the formula that would allow a return to negotiations with the Palestinians involved an incentive package to Israel, but also a number of steps Israel would have to make in return.

The chief of the White House Middle East desk, Dan Shapiro, presented some of the components of a formula in a conference call Friday with American Jewish leaders. Reportedly, the U.S. would pledge to block resolutions against Israel at the United Nations for its raid on the Gaza-bound ship Mavi Marmara, to work against resolutions aimed to expose Israel's nuclear program at the International Atomic Energy Agency and to increase pressure on Iran and Syria to stop their nuclear weapons programs.

The incentives apparently also include a supply of advanced weaponry to Israel.

Government officials in Jerusalem said Clinton expects Netanyahu to publicly state his willingness to discuss borders. Netanyahu reportedly expressed his willingness to discuss the subject during a one-on-one talk with U.S. President Barack Obama on July 6. Netanyahu's statements at that meeting led Obama to pressure Palestinian Authority President Mahmoud Abbas to agree to direct talks with Israel.

However, in the three rounds of talks between Abbas and Netanyahu, Jerusalem demanded security arrangements be first on the agenda and would not accept a document from Abbas outlining the Palestinian position on borders and security, including a map.

Obama is reportedly angry with Netanyahu, particularly over the premier's rejection of Obama's proposal of a letter of guarantees in exchange for a new 60-day construction freeze in the territories.

One of the main messages Clinton conveyed was that when Obama returned from Asia he would decide the fate of the incentive package to Israel.