AMMAN/OCCUPIED JERUSALEM (Agencies)

The United States said on Thursday it believed indirect Mideast peace talks between Israel and the Palestinians were still on, saying it had no confirmation that the Palestinians had decided to drop out.

State Department spokesman P.J. Crowley cast doubt over comments by Arab League chief Amr Moussa on Wednesday saying that Palestinian President Mahmoud Abbas had decided to scrap the talks following Israel's announcement of the construction of 1,600 new settler homes.

"I don't think that report that's been circulating for the last 24 hours is accurate," Crowley said. "As far as I know, we are still moving forward. We have not heard from the Palestinians that they have pulled out."

	The king renewed Jordan's condemnation of Israel's decision to build new settlements in east Jerusalem
Jordan's palace statement

Jordanian condemnation

Jordan's King Abdullah II meanwhile told visiting U.S. Vice President Joe Biden that Israel's new settlements plans threaten peace efforts and could lead to more regional violence.

"The king renewed Jordan's condemnation of Israel's decision to build new settlements in east Jerusalem," a palace statement quoted the king as telling Biden at a meeting.

He said "such unilateral actions, which are internationally rejected, threaten the peace process and put the entire region at risk of getting into a new cycle of conflict," according to the statement.

"Achieving peace in the Middle East requires a leading U.S. role. The entire world is paying the price for the troubled peace process," said the king, whose country, a key U.S. ally, signed a peace treaty with Israel in 1994.

Israeli Prime Minister Benjamin Netanyahu publicly apologized to the vice president on Thursday in a bid to defuse the row over settlements, which prompted a Palestinian boycott of indirect peace talks.

Biden welcomed that but again criticized Israel's decision to approve construction of 1,600 new homes for Jewish settlers in east Jerusalem, which was announced during his visit this week.

"Unfortunate timing"

Israel's right-wing prime minister, who supports expanding Jewish communities in annexed east Jerusalem, said he had spoken to Biden and "expressed his regret for the unfortunate timing."

Biden welcomed Netanyahu's response.

"Sometimes only a friend can deliver the hardest truths, and I appreciate ... the response by the prime minister today," Biden said in a speech at Tel Aviv University.

He noted that Netanyahu "clarified that the beginning of actual construction on this particular project would likely take several years."

"That's significant because it gives negotiators the time to resolve this as well as other outstanding issues," said Biden, while reiterating condemnation of Israel's go-ahead for the settlement construction.

Netanyahu called Biden on Thursday morning, "and both agreed the crisis is behind them," an official in the premier's office said.

The Palestinians, however, rejected the statement because it only addressed the timing of the project and not its substance.

"The continuation of settlements is the error, not the timing of them, because they are always illegal," Palestinian chief negotiator Saeb Erakat told AFP.

Biden said it was crucial that Israel and the Palestinians resume talks soon. "The status quo is not sustainable."

But Palestinian President Mahmoud Abbas said earlier he would not enter into any negotiations with Israel until the Jerusalem settlement project was frozen, while the Arab League withdrew its support for indirect talks.

Boosting chances of indirect talks

Biden had hoped his visit to the Middle East would boost the chances of indirect talks. Instead he found himself dealing with the fall-out from Israel's decision.

Netanyahu also came under fire from a minister of the center-left Labor party, a key ally in his otherwise right-wing coalition, who warned that the party may quit over the move.

"Members of the Labor party have more and more difficulty in taking part in a coalition government that they joined with the purpose of re-launching the peace process with the Palestinians," Agriculture Minister Shalom Simhon said.

The Palestinians see east Jerusalem as the capital of their promised state.

Israel, which seized east Jerusalem in the 1967 Six Day War and later annexed it in a move not recognized by the international community, considers the city its eternal and indivisible capital.

The decision to build the homes in the ultra-Orthodox Ramat Shlomo neighborhood ignited an international furor, with both the European Union and the United Nations reiterating that all settlements are "illegal."

Russia called the move "unacceptable" and Britain said it would "give strength to those who argue that Israel is not serious about peace."

U.S. envoy George Mitchell plans to raise the matter when he travels to the region again next week, according to the U.S. state department.

Mitchell had helped broker a deal to begin indirect talks. The last round of direct negotiations collapsed when Israel launched a devastating offensive against the Hamas-controlled Gaza Strip in December 2008.