Mr Biden said Israeli plans undermined trust needed for talks
US Vice-President Joe Biden says there must be no delay in resuming Mid-East peace talks, despite a row over Israeli plans for new homes in East Jerusalem.
Mr Biden repeated his criticism of the timing of the building decision, but praised the response of Prime Minister Benjamin Netanyahu to the controversy.
He also stressed that the United States had "no better friend than Israel".
The Palestinian Authority earlier said talks would be "very difficult" if the plans for the homes were not rescinded.
 |  The statement is unacceptable because it talks about an error in timing and not the error in substance, which is the continuation of settlements that must stop  Saeb Erekat Chief Palestinian negotiator |
President Mahmoud Abbas informed Arab League Secretary-General Amr Moussa that he had "demanded that the Americans help us revoke this order" at a meeting with Mr Biden in Ramallah on Wednesday, chief negotiator Saeb Erekat told the BBC.
Earlier, Mr Moussa said the Palestinians had decided not to take part.
Both sides had only agreed on Monday to hold indirect, "proximity talks" in a bid to restart the peace process, which has been stalled for more than a year.
'Willing partners'
In a speech at Tel Aviv University on Thursday, Mr Biden said the US had "no better friend in the community of nations than Israel" and that their relationship was "impervious to any shifts in either country, and in either country's partisan politics".
But, he added, the decision by the Jerusalem municipality to approve the 1,600 new housing units in the settlement of Ramat Shlomo had "undermined the trust required for productive negotiations" and warranted his unequivocal condemnation.
| ANALYSIS  By Paul Wood BBC News, Jerusalem Mr Biden was careful to praise Mr Netanyahu's statement that a mechanism would be put in place to make sure future announcements of such building did not come at sensitive moments during the peace process. And he emphasised that building would not take place at Ramat Shlomo for several years. It seems that the White House had decided to try to avoid another damaging and protracted tussle with the Israeli prime minister about settlements. After all, Israel came out on top in the last test of wills - agreeing to something far less than the total settlement freeze that Washington and the Palestinians had been demanding. The particular formula put forward by Israel for Ramat Shlomo - and seemingly accepted by the US - still leaves the Palestinians in a very difficult position. Has US friendship with Israel soured? Can the US broker peace? |
"Sometimes only a friend can deliver the hardest truth," he told the audience.
However, the US vice-president said he also appreciated the response of Prime Minister Benjamin Netanyahu, "who announced this morning that he is putting in place a process to prevent this sort of occurrence, and who clarified that the beginning of actual construction would likely take several years".
"That's significant because it gives negotiations the time to resolve this as well as other obstacles," Mr Biden said.
Close to 500,000 Jews live in more than 100 settlements built since Israel's 1967 occupation of the West Bank and East Jerusalem. They are illegal under international law, although Israel disputes this.
Mr Biden warned Israeli leaders that in President Mahmoud Abbas and his Prime Minister, Salam Fayyad, they "finally have willing partners who share the goal of peace between two states".
"Their commitment to peace is an opportunity that must be seized."
He said Washington would continue to hold both sides accountable for any statements or actions that inflamed tensions and prejudiced the outcome of the indirect talks brokered by the US special envoy, George Mitchell.
"The most important thing is for these talks to go forward and go forward promptly and go forward in good faith," he added. "We can't delay because when progress is postponed, extremists exploit our differences."
'Crisis ended'
Mr Abbas has refused to resume direct negotiations with Israel for 17 months because of its refusal to put a complete stop to the expansion of settlements in the West Bank and East Jerusalem.
In November, Israel announced a 10-month suspension of new building in the West Bank, under heavy US pressure. But it considers areas within the Jerusalem municipality as its territory and thus not subject to the restrictions.
|   In the shadow of a settlement An Israeli settlement in close-up Middle East 'haunted by the past' |
Tuesday's announcement by the Israeli interior ministry that the Jerusalem authorities had approved the expansion of Ramat Shlomo overshadowed the visit by Mr Biden, the highest ranking Obama administration official yet to go to the region.
On Thursday morning, Mr Netanyahu telephoned the vice-president and "expressed his regret for the unfortunate timing" of the decision.
"Both agreed the crisis was behind them," his office said.
Mr Netanyahu reiterated that he had not been aware of the announcement, and said he had summoned Interior Minister Eli Yishai to reprimand him.
The final approval process for the settlement would probably take more than a year, with construction starting several years from now, he said.
Mr Erekat dismissed Mr Netanyahu's statement, saying it was "unacceptable because it talks about an error in timing and not the error in substance".
"All decisions regarding settlements in the West Bank and East Jerusalem should be cancelled," he told AFP news agency.
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