Israel and the Palestinians announced moves Tuesday that could scuttle peace talks, prompting US Secretary of State John Kerry to call off a second visit in as many days aimed at saving them.

Earlier in the day, Kerry had wrapped up a lightning visit to Israel, planning to return to the region on Wednesday in hopes of convincing the Palestinians to extend the faltering talks beyond their April 29 deadline.

But just hours after he left, news emerged that Israel had reissued tenders for hundreds of settler homes in annexed east Jerusalem, and just as Washington was to push for a settlement freeze.

Not long afterwards, Palestinian president Mahmud Abbas announced a request to join several UN agencies, abandoning pledges to refrain from doing so during nine the months of talks that Kerry kick-started in July.

"We are no longer travelling tomorrow," a senior State Department official said, shortly after Abbas's announcement.

US peace efforts were already teetering on the brink after Israel refused to free a fourth and final group of 26 veteran Palestinian prisoners, which would have completed an agreement that had brought the sides back to talks.

The negotiations have faltered over several issues, notably Israel's settlement expansion in occupied Palestinian territory, with the Palestinians demanding a freeze on settlement construction, including in east Jerusalem.

Tuesday's 708 tenders in the east Jerusalem settlement neighbourhood of Gilo came on top of thousands of new homes announced over the course of the talks.

Israeli NGO Ir Amim described the tenders as "a poke in the eye of both the Palestinians and the Americans," army radio said.

And Hagit Ofran, from Israeli's Peace Now NGO, accused the housing ministry of "trying to forcefully undermine the peace process... and John Kerry's efforts to promote it."

Palestinian leaders had repeatedly threatened to resume their action through international courts and the UN over Israel's settlement expansion in the West Bank and east Jerusalem, which is considered illegal under international law.

They agreed to refrain from such action during the talks, and Israel in turn said it would release 104 long-serving Palestinian prisoners.

But Israel has refused to release the final batch of prisoners, using it as a bargaining chip to try to extend talks, a move that prompted furious Palestinian officials to warn they would break off negotiations.

On Monday, the Palestinians gave Kerry a 24-hour deadline to come up with a solution to the prisoner row, warning that failure to do so would see them turning to UN bodies to press their claims for statehood.

- Move 'not against America' -

But late Tuesday afternoon, Abbas announced a request to join "15 UN agencies and international treaties, beginning with the Fourth Geneva Convention.

"The demands (for membership) will be sent immediately" to the relevant agencies, he said.

"This is not a move against America, or any other party -- it is our right, and we agreed to suspend it for nine months," he said, without explaining why he had acted before that period ended.

Kerry had met Israeli Prime Minister Benjamin Netanyahu for two hours late Monday before meeting Palestinian negotiators, then the pair held a second meeting early Tuesday.

US efforts have been focused recently on getting the parties to agree an extension to the end of the year.

A US proposal to continue talks was to include a limited freeze on settlement construction, with Israel adopting "a policy of restraint with (West Bank) government tenders" but would not include annexed east Jerusalem.

Sources close to the negotiations had said Washington was also mulling a proposal to free Jonathan Pollard, who was arrested in Washington in 1985 and sentenced to life in prison for spying on America on Israel's behalf.

One of the sources also said the final batch of Palestinian prisoners would be freed, and Israel would also agree to free another 400 security prisoners not involved in deadly anti-Israeli raids.

But White House Jay Carney said before the Tuesday afternoon developments that President Barack Obama had not made any decision on Pollard.

burs-jad/al