Abbas meanwhile warned that time was "of the essence" in restarting regional peace moves, and vowed that Palestinians would live up to all their obligations on the stalled US-backed roadmap.

Obama recalled that he was "very clear about the need to stop settlements, to make sure we are stopping building outposts," in his talks with Israeli Prime Minister Benjamin Netanyahu here last week.

But he also added that Netanyahu needed time to work such matters through his fractious coalition government, as Israel and the United States spar publicly over the issue.

"I am confident that we can move this process forward, if all the parties are willing to take on the responsibilities and meet the obligations that they've already committed to," Obama said and pledged to work "aggressively" towards peace.

Abbas, meeting Obama for the first time since the US leader took office in January, said that he had shared ideas with Obama based on the roadmap and the 2002 Saudi peace plan backed by the Arab league.

"Time is of the essence," Abbas said.

Secretary of State Hillary Clinton Wednesday significantly hardened Obama's call for settlements activity in the occupied West Bank to be stopped, which was delivered during his talks with Netanyahu last week.

Obama "wants to see a stop to settlements. Not some settlements, not outposts, not natural growth exceptions," Clinton said.

But Israel on Thursday dismissed the blunt US call.

"Normal life" will be allowed in settlements in the occupied West Bank, government spokesman Mark Regev said, using a euphemism for continuing construction to accommodate population growth.

He added the fate of settlements "will be determined in final status negotiations between Israel and the Palestinians and in the interim, normal life must be allowed to continue in those communities."

Abbas's spokesman Nabil Abu Rudeina said that there was "complete US-Palestinian understanding" on a two-state solution and an end to settlements in the West Bank.

"We are going to see a period of intense diplomatic activity which will be crucial for how events will unfold across the region," he said.

Palestinian negotiator Saeb Erekat told AFP that "all Washington is speaking with one voice" on the need for both sides to respect obligations, on a two-state solution and the need to halt Israeli settlements.

The Palestinian Authority has ruled out restarting peace talks with Israel unless it removes all roadblocks and freezes settlement activity.

Netanyahu told Obama last week at their first White House meeting that he was willing to "immediately" relaunch the peace talks but failed to publicly back the creation of a Palestinian state or to freeze settlement activity.

The Israeli prime minister told his cabinet Sunday he did not intend to build new settlements but that "it makes no sense to ask us not to answer to the needs of natural growth and to stop all construction," aides said.

The Palestinian Authority welcomed Clinton's statements, noting that a complete settlement freeze is part of terms of the US-backed roadmap, an international plan at the heart of peace negotiations since 2003.

Abbas, who arrived late Tuesday in Washington, met World Bank president Robert Zoellick Wednesday, on the eve of the bank releasing an additional 55 million dollars in aid for the Palestinian Authority, according to Palestinian officials.

After the peace process was relaunched under US auspices in November 2007 in Annapolis, Maryland, Abbas and former Israeli prime minister Ehud Olmert met more than 20 times. But the negotiations, suspended since Israel's military offensive in the Gaza Strip in December and January, achieved no tangible results.

earlier related report
Obama meets Palestinian leader Abbas
US President Barack Obama held his first talks since taking office with Palestinian president Mahmud Abbas Thursday, as his administration publicly sparred with Israel over West Bank settlements.

Abbas arrived at the White House for a private session of one-on-one talks with Obama, which were to be followed by discussions with expanded delegations, after the US president flew home from a trip to California.

The Palestinian leader came to Washington hoping for the United States to up pressure on Israel to back a Palestinian state -- a step Israeli Prime Minister Benjamin Netanyahu declined to take in his visit to the White House last week.

But he also faced skepticism among some Washington analysts that he had the political weight or backing among divided Palestinians to secure painful concessions in the event any serious talks with the Israelis get under way.

Secretary of State Hillary Clinton Wednesday significantly hardened Obama's call for settlements activity in the occupied West Bank to be stopped, which was delivered during his talks with Netanyahu last week.

Obama "wants to see a stop to settlements. Not some settlements, not outposts, not natural growth exceptions," Clinton said.

But Israel on Thursday dismissed the blunt US call.

"Normal life" will be allowed in settlements in the occupied West Bank, government spokesman Mark Regev said, using a euphemism for continuing construction to accommodate population growth.

He added the fate of settlements "will be determined in final status negotiations between Israel and the Palestinians and in the interim, normal life must be allowed to continue in those communities."

Abbas's spokesman Nabil Abu Rudeina said that there was "complete US-Palestinian understanding" on a two-state solution and an end to settlements in the West Bank.

"We are going to see a period of intense diplomatic activity which will be crucial for how events will unfold across the region," he said.

Palestinian negotiator Saeb Erekat told AFP that "all Washington is speaking with one voice" on the need for both sides to respect obligations, on a two state solution and the need to halt Israeli settlements.

The Palestinian Authority has ruled out restarting peace talks with Israel unless it removes all roadblocks and freezes settlement activity.

The US side will likely pressure Abbas to undertake more confidence building measures with Israel and White House spokesman Robert Gibbs said Wednesday Washington hoped the Palestinians would go back to talks with Israel.

Obama may also try to carefully bolster Abbas, who is in a dicey political position, with the Palestinian Authority ascendant in the West Bank but the militant Hamas organization wielding power in Gaza.

"President Abbas has a tremendous credibility problem," said Jon Alterman, head of the Middle East program at the Center for Strategic and International Studies.

"I am not sure how you make any of this work unless you have a strong Palestinian leadership and president Abbas has not done himself many favors," he added, noting as well that "the Israeli and American governments have not done him any favors" meant to enhance his leadership.

Netanyahu told Obama last week at their first White House meeting that he was willing to "immediately" relaunch the peace talks but failed to publicly back the creation of a Palestinian state or to freeze settlement activity.

The Israeli Prime Minister told his cabinet Sunday he did not intend to build new settlements but that "it makes no sense to ask us not to answer to the needs of natural growth and to stop all construction," aides said.

The Palestinian Authority welcomed Clinton's statements, noting that a complete settlement freeze is part of terms of the US-backed roadmap, an international plan at the heart of peace negotiations since 2003.

Abbas, who arrived late Tuesday in Washington, met World Bank president Robert Zoellick Wednesday, on the eve of the bank releasing an additional 55 million dollars in aid for the Palestinian Authority, according to Palestinian officials.

After the peace process was relaunched under US auspices in November 2007 in Annapolis, Maryland, Abbas and former Israeli prime minister Ehud Olmert met more than 20 times. But the negotiations, suspended since Israel's military offensive in the Gaza Strip in December and January, achieved no tangible results.

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