U.S. officials will meet with Israeli and Palestinian representatives this week in an effort to revive the peace process, possibly through indirect "proximity talks" with U.S. mediation.

Secretary of State Hillary Clinton is expected to outline Washington's strategy for Israeli-Palestinian relations when she addresses the Saban Forum in the U.S. capital on Friday.

Negotiations between Jerusalem and Washington over a new partial moratorium on settlement construction and on the terms of the guarantees proposed by U.S. President Barack Obama have hit a dead end, according to a senior American source.

A senior Washington official told Israeli correspondents during a conference call on Tuesday that after consulting with both the Israelis and the Palestinians Obama's administration reached the conclusion that conditions were not ripe now for successful negotiations, even with a new freeze.

"After consultation with the parties, we have determined that a moratorium extension will not at this time provide the best basis for resuming direct negotiations," the official said.

A second administration official said an announcement of the decision was expected later yesterday. Both officials spoke on condition of anonymity because they were not authorized to speak publicly on the matter.

The officials stressed that the administration was not giving up in trying to broker a peace deal.

"In the coming days and weeks we will engage with both sides on the core substantive issues as well as with Arab states and other international partners with the goal of working toward a framework on all permanent status issues," the first official said.

Isaac Molho, Prime Minister Benjamin Netanyahu's special envoy to the peace talks, is in Washington for talks with administration officials and is scheduled to remain there until the end of the week. His counterpart in the Palestinian Authority, Saeb Erekat, is expected to head there as well. U.S. officials are expected to meet with each of them in private in a bid to find a way to keep the peace process alive.

Officials in the Prime Minister's Office yesterday tried to coordinate the announcement of the failure of the talks for a construction freeze with Washington in order to head off a possible crisis in communications with the United States. Netanyahu has expressed satisfaction with the coordination between Jerusalem and Washington in recent weeks, and members of his inner circle say he was not disappointed.

One official from the PMO said the Palestinians were to blame for the breakdown of the direct talks between Israel and the PA, by demanding that the talks on the borders of a future Palestinian state begin within three months.

Defense Minister Ehud Barak said yesterday that the reason the Obama administration halted talks with Israel about curbing West Bank settlement construction and resuming peace talks with the Palestinians was because Washington was distracted by the WikiLeaks release of secret documents and tensions between the Koreas.

In Washington, State Department spokesman P.J. Crowley denied that the U.S. was holding up the talks. "The process has not stopped," he told reporters. "Our efforts are not suspended."

He said that instead, perhaps Israel was preoccupied with putting out a huge forest fire that burned until Sunday.

The U.S. has pressed Israel to renew a moratorium on new settlement construction in exchange for security and diplomatic assurances. Israel wants that in writing, as well as a written pledge that East Jerusalem will be exempted from the moratorium.

Palestinians say they won't return to stalled peace talks unless Israel halts all building in the West Bank and East Jerusalem - lands they want for part of their future state.

Netanyahu returned from a November trip to the United States with a list of security and diplomatic guarantees, including 20 next-generation stealth fighter planes and U.S. pledges to veto anti-Israel resolutions at the United Nations, according to Israeli officials. In exchange, Israel was to renew limits on settlement construction that expired in late September.

But days later, the deal snagged after members of Netanyahu's cabinet demanded a written pledge from the United States that the moratorium would exclude East Jerusalem. Such a pledge has not materialized.