The Israeli government has refused to respond officially to the disparaging remarks made by the American and French presidents about Prime Minister Benjamin Netanyahu last week, but Israeli diplomats believe that they mainly reflect the tensions between Mr Netanyahu and senior European leaders.

"I can't bear him, he's a liar," President Nicolas Sarkozy was overheard saying to President Barack Obama during a meeting at the G20 summit at Cannes. Mr Obama answered: "You may be sick of him, but me, I have to deal with him every day."

A White House spokesman would not deny or say anything about the quotes following the reports of the conversation on a French website this week, and no Israeli spokesperson respond to the matter either.

However, while the leaders' exchange was pounced upon by senior members of the American Republican party, who are portraying Mr Obama as hostile to Israel, at least one Israeli diplomat said: "I do not believe that the quotes reflect any tensions between Israel and the US."

According to the diplomat, the relations between the Israeli government and the Obama administration have actually improved over recent months as a result of the co-ordination between the two governments over the Palestinian bid for UN recognition. Instead, Israel is mainly dismayed at the downturn in diplomatic ties with its two closest allies within the European Union - France and Germany.

Chancellor Angela Merkel has repeatedly voiced her frustration in recent weeks over Mr Netanyahu's refusal to co-ordinate his diplomatic moves with the EU leaders, including the government's decisions last week to build 2,000 new homes across the Green Line and freeze money transfers to the PA.

At the same time, Mr Sarkozy, who was regarded by Mr Netanyahu as a personal friend, has decided to support the Palestinian bid. France voted last week in favour of the Palestinians receiving full membership of Unesco.