The Israeli Cabinet this week accepted, with reservations, the Quartet's proposal for renewed negotiations with the Palestinians.

On Sunday, the Cabinet approved Prime Minister Benjamin Netanyahu's decision to accept the framework for negotiations proposed two weeks ago by the Quartet.

The proposal includes the resumption of talks between Israel and the Palestinians without pre-conditions. The timetable for the talks is to agree within three months on a basic solution of two states, on the basis of the pre-1967 borders, and the completion of a full peace plan within a year.

Mr Netanyahu agreed to the proposal despite his misgivings but is planning to voice reservations over the short timetable and the focus on "borders first" at the opening of the talks.

The Palestinian leadership has yet to deliver its final decision on the Quartet's proposal but senior officials have already said they will not agree to return to negotiations without an Israeli commitment to freezing all settlement building for the next three months.

Meanwhile, the Palestinians continue to pursue their campaign to gain recognition for an independent state from the UN Security Council.

This week they announced that they had succeeded in persuading Council members Nigeria and Gabon to support them. While this has not yet been confirmed by those governments, even if the Palestinians do gain a majority in the Security Council, the resolution is certain to be vetoed by the United States.

Currently, the Palestinian request is being examined by a UN technical committee which will assess whether the Palestinian Authority conforms to the requirements of establishing a new state.

The United States is putting further pressure on the Palestinians to drop their UN policy, including a freeze on $200 million of aid, imposed by Congress - about a third of American's annual aid to the PA.

Mr Netanyahu had more diplomatic trouble last week when the leader of one of Israel's most dependable allies, German Chancellor Angela Merkel, called him to lodge her protest over the government's approval of the building of 1,100 new homes in the east Jerusalem neighbourhood of Gilo.

She told the prime minister that the decision was "a breach of trust which casts doubt on your willingness truthfully to strive for peace." He responded that Israel regarded Gilo as an integral part of Jerusalem and would continue building in the city.