His remarks to MPs came two days after Israel's chief negotiator Yitzhak Molho held a third exploratory meeting in Amman with Palestinian negotiator Saeb Erakat in a bid to restart direct talks which have been on ice since September 2010.

"Erakat wants to abandon talks on January 26," Netanyahu was quoted as saying by a spokesman, in reference to the three-month deadline set by the diplomatic Quartet of peacemakers from the United States, European Union, Russia and United Nations.

On October 26, Quartet envoys said they were giving the parties three months to "come forward with comprehensive proposals on territory and security."

With the deadline looming, Palestinian officials have made clear they will not continue any form of talks after January 26 unless Israel freezes settlement construction and agrees to base any future talks on the lines which existed before the 1967 Six-Day War.

But Netanyahu made clear Israel was working on a different schedule.

"We are only counting talks from January 3 which means we have until April 3," he said, referring to the date of the first face-to-face encounter between the two sides.

Both parties have been quick to make clear that the Amman meetings did not constitute a return to direct talks, although the two sides exchanged position papers when they first met on January 3.

"We gave (them) a document with 21 points of consensus in Israel," Netanyahu said on Monday. "I hope we can come on January 26 and continue talks."

The Palestinians say they have submitted their position on borders and security, but accuse Israel of failing to reciprocate.

An official in the West Bank town of Ramallah told AFP earlier this month that the Israelis' only proposal was "for a (Palestinian) state on provisional borders -- which we totally reject."

Abbas welcomed the comments by the British official, which came as Israeli and Palestinian negotiators squabbled over the conditions to restart full talks which have been on ice since September 2010.

Speaking after talks with Abbas in London, Clegg said Israel's continued construction of settlements in the occupied West Bank and east Jerusalem was causing "immense damage" to the faltering peace process.

"It is an act of deliberate vandalism to the basic premise on which negotiations have taken place for years and years and years," he told a joint press conference with Abbas.

Abbas, who is also scheduled to visit Germany and Russia as part of a week-long tour, welcomed Clegg's comments.

"This is exactly what we wanted to hear officially from the government of the United Kingdom," he said through a translator.

The Palestinian leader later met Prime Minister David Cameron, who warned that time was running out for a two-state solution.

"We will do everything we can to help promote these discussions," Cameron said as he met Abbas at 10 Downing Street, the British premier's official residence.

"We think that time, in some ways, is running out for the two-state solution unless we can push forwards now, because otherwise the facts on the ground will make it more and more difficult, which is why the settlement issue remains so important."

Britain is a key ally of Israel but has in recent months stepped up its criticism of Israeli settlement building.

Settlements have proved a consistent sticking point in talks between Israel and the Palestinians, and caused the breakdown in the direct talks that began in September 2010.

Envoys from both sides have since met twice under the auspices of Jordan and the peacemaking Quartet, which comprises the United States, United Nations, European Union and Russia, in an attempt to kickstart the talks.

The Palestinians say they will not negotiate while Israel builds settlements and they want clear parameters for any new talks, including an acceptance by Israel of the lines which existed before the 1967 Six-Day War as a basis for negotiations on borders.

But Israeli Prime Minister Benjamin Netanyahu said on Monday that the two sides were still at odds over the Quartet's deadline for new proposals on borders and security.

He said Palestinian negotiators wanted to break off talks on January 26 when they say a three-month deadline set by the Quartet falls.

Israel, however, is working from the last face to face talks on January 3 and says the deadline expires on April 3, Netanyahu said.

The number of Israeli settlers living in the West Bank at the end of 2011 rose by 4.3 percent compared with the previous year to 342,414, an Israeli lawmaker said on Sunday.