Following its failure to secure a second settlement freeze, the Obama administration is now pushing for indirect talks over the "core" issues between Israel and the Palestinians.

The senior US negotiator George Mitchell resumed the "shuttle diplomacy" between Jerusalem and Ramallah this week, after four fruitless months spent trying to enable direct talks.

Mr Mitchell and the Prime Minister met for over three hours on Monday in a meeting that, according to Israeli sources, was mainly dedicated to "working out a new procedure for the negotiations with the Palestinians".

Mr Netanyahu said that he is prepared to put forward Israeli positions regarding the core issues, although he is interested in dealing first with security arrangements and a solution for the Palestinian refugee issue, while the Americans are expected to back the PA's position that the first issue to deal with has to be the borders of the Palestinian state, which puts the thorny matters of settlements and Jerusalem back on the table. Even if Mr Netanyahu is prepared to talk about these issues, he will struggle with his coalition where the majority is opposed to any concessions.

Meanwhile, there was one ray of sunshine for Israeli diplomacy this week as foreign ministers of key European Union states said that the EU did not support a unilateral declaration of an independent state by the Palestinians.