Benjamin Netanyahu AP September 5, 2010
Prime Minister Benjamin Netanyahu chairing a weekly cabinet meeting in Jerusalem on Sept. 5, 2010. Photo by AP
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Prime Minister Benjamin Netanyahu late on Saturday urged the Palestinians not to quit peace talks as negotiations hit a crisis point over Israel's settlement construction in the West Bank.

Earlier in the day, a senior Palestinian official said talks could not continue unless Israel renewed a 10-month construction freeze that expired last week. In response, Netanyahu accused the Palestinians of violating the spirit of negotiations, which began in Washington a month ago, by imposing preconditions.

"The way to achieve an historic peace agreement between our two nations is to sit around the negotiating table, seriously and continuously, and not to leave it, because that is the place where the divisions between us will be resolved," Netanyahu said in a statement.

While giving no hint that Israel would bow to Palestinian demands, Netanyahu said he believed a "creative" solution could still resolve the impasse and keep talks alive.

"Just a month ago the Palestinians entered direct peace talks with no preconditions after my government made a range of gestures to push forward the dialogue," he said.

"Before that, over 17 years, the Palestinians conducted a direct dialogue with Israeli governments, while building in Judea and Samaria [the West Bank] continued, including during the final year of the previous administration."

Settlement building has been slower under Netanyahu's current administration than under any Israeli government since the mid-1970s.

Netanyahu added: "I hope that now they will not turn their backs on peace and continue talks to reach a deal within a year."

Palestinian President Mahmoud Abbas had repeatedly claimed he would abandon negotiations if Israel failed to prolong the freeze, but many observers had expected him to soften his stance. Yet the Palestinians on Saturday seemed determined to stick to their position.

"The leadership confirms that the resumption of talks requires tangible steps, the first of them a freeze on settlements," said Yasser Abed Rabbo, a senior Palestinian Liberation Organization official, after a meeting in Ramallah.

"The Palestinian leadership holds Israel responsible for obstructing the negotiations," he added, reading a statement issued after the meeting.

U.S. envoy George Mitchell spent Friday mediating between the sides in a last-ditch bid to avert a crisis, to no avail.

"There will be no negotiations in the shadow of continued settlement," said Nabil Abu Rdainah, a spokesman for Palestinian Authority President Mahmoud Abbas.

The Palestinian statement appeared to stop just short of an official end to negotiations however, and some Israelis remained optimistic.

Defense Minister Ehud Barak said late Saturday that he retained hope of a compromise before a decisive Arab League summit next weekend.

"We must all work with discretion and determination to overcome these difficulties and continue with talks that will achieve results," Barak said.