Aides to Israeli Prime Minister Benjamin Netanyahu said Friday he would approve hundreds of new housing units in West Bank settlements before considering a temporary freeze in construction, in an apparent snub to Washington's public demand for a total halt.

The aides said any freeze would not encompass building the new units and finishing some 2,500 others currently under construction. Netanyahu faces internal opposition since his coalition is dominated by hard-liners opposed any freeze.

The settlement suspension also would not include east Jerusalem, which the Palestinians hope to make their future capital.

The U.S. has a set a high public bar for a freeze, saying repeatedly that all settlement activity on lands the Palestinians claim for a future state must stop, without exception. However, Israel appeared to gain some wiggle room in recent weeks as the sides discussed the details of a would-be settlement freeze.

The two Netanyahu aides spoke to The Associated Press on condition of anonymity because the government has made no official announcement. The information also appeared in major Israeli media Friday morning and was clearly intended for public consumption.

It was unclear if Washington had prior knowledge of the Israeli announcement, which had the potential to undermine the Obama administration's credibility in the Arab world.

Kurt Hoyer, spokesman for the U.S. embassy in Tel Aviv, said Washington would be unlikely to accept anything "contrary to the spirit of negotiations they've been undertaking" and added it was "doubtful" the U.S. had signed off on the Israeli decision.

But the initial response from Washington was muted.

"We're committed to trying to reach an agreement on settlements with the Israelis," a senior U.S. official said Friday, speaking on condition of anonymity due to the sensitivity of discussions. "Our goal here is to create the conditions on the ground for the resumption of direct negations between the two parties."

Other U.S. officials have said that a successful resolution to the issue will be any outcome that brings the Israelis and Palestinians to the negotiating table.

The Palestinians, however, say no freeze, no talks.

"I think the only thing that will be suspended by this announcement is the peace process," senior Palestinian negotiator Saeb Erekat said of the Israeli remarks.

In the next few days, the Netanyahu aides said, the Israeli leader will approve the construction of hundreds of new apartments in the West Bank.

They didn't give a specific number, but said these units would be in addition to the 2,500 that are already under construction and will continue to be built. The construction will be centered in the main settlement blocs, areas Israel hopes to retain after any peace deal.

In exchange for a suspension, Netanyahu would expect the Arab world to take steps toward normalizing relations with Israel, the aides added. The U.S. has been pressing Arab countries to make moves toward normalization, an effort that has been inconclusive so far.

Ophir Pines-Paz, a dovish lawmaker whose Labor Party is part of Netanyahu's coalition, said issuing new building permits was "unnecessary and damaging."

"I fear that issuing new permits will foil the next step -- a settlement freeze that would build confidence and allow negotiations to resume," he said.

There have been signs of a settlement slowdown even without the announcement of an official freeze. Government statistics released Thursday showed that new construction in Israel's West Bank settlements fell by one-third in the first half of 2009.

The number of Israeli settlers has steadily increased for decades and has more than doubled since the early 1990s. Today, about 300,000 Israelis live among about 2.5 million Palestinians in the West Bank. An additional 180,000 Israelis live in east Jerusalem neighborhoods built since Israel captured the area in the 1967 Mideast war.

Likud lawmaker Danny Danon told Israel Radio that most of the Likud and the coalition don't consider what Netanyahu is about to do is "the right step."

By approving new construction, the prime minister is eyeing his hard-line allies and trying to "sweeten the pill" of impending settlement restrictions, prominent Israeli columnist Nahum Barnea wrote Friday in the daily Yediot Ahronot.

"But there is one option he should give up: An attempt to have his cake and eat it too. That won't work in Washington. It won't work here," Barnea wrote.

Peace talks have been suspended since shortly before Netanyahu's election, but in recent weeks there have been signs of a thaw.

Israeli and Palestinian Cabinet ministers met this week to discuss development projects, in the first Cabinet-level contacts between the sides since Netanyahu came to power. The sides have also said that a first meeting between Netanyahu and Palestinian President Mahmoud Abbas is likely at the U.N. General Assembly in New York later this month.