US President Barack Obama has spoken of the “special bond” the US has with Israel, keen to smooth over the mounting diplomatic crisis between the countries.

Tensions have been high since the Israeli Interior Ministry announced the building of 1,600 new homes in Ramat Shlomo, east Jerusalem, just 24 hours after US Vice President Joe Biden visited the country in an attempt to start peace talks between Israel and the Palestinians.

Mr Obama said: "Israel's one of our closest allies, and we and the Israeli people have a special bond that's not going to go away. But friends are going to disagree sometimes.

“I specifically sent Vice President Biden to Israel to send a message of support, and reassurance of my belief that Israel’s security is sacrosanct and that we have a host of shared interests.”

But he described his frustration at the failure to restart the peace talks, scuppered by the announcement of the planned housing, and by the rioting of Palestinians in east Jerusalem.

He said: “There is a disagreement over how we can move this peace process forward. The actions that were taken by the Interior Minister of Israel weren’t helpful to that process. Mr Netanyahu acknowledged as much and apologised for it, and what we’ve said is that we need both sides to take steps to make sure that we can rebuild trust.”

He added: “Yesterday’s riots by the Palestinians, we condemn them in the same way.”

Mr Netanyahu welcomed Mr Obama’s words but gave no further clue whether he would agree to US Secretary of State Hillary Clinton’s request that he should back down over the planned housing.

He said: "I have a deep appreciation for President Obama's commitment to Israel's security, which he has expressed many times."