Updated

US Secretary of State John Kerry Friday met with chief Palestinian negotiator Saeb Erakat in a final push to get a peace bid back on track before heading home.

The meeting comes after the Palestinian leadership in Ramallah rejected Kerry's proposals for a framework to guide the relaunch of peace talks stalled for nearly three years.

The two men met in Amman for talks which lasted barely 45 minutes, after Kerry and his team spent a long night waiting to see what the Palestinians would do.

The setback for the US plan came from the governing Revolutionary Council of Palestinian president Mahmud Abbas's own Fatah movement, which demanded changes.

The broader Palestine Liberation Organisation, which also includes leftwing factions less sympathetic towards a compromise, said it was also drawing up a formal response to Kerry's proposals.

Palestinian member of parliament Mustafa Barghuti said "most factions" within the PLO had rejected Kerry's proposal.

"It is appropriate and encouraging that there is such a serious debate about these issues," a senior State Department official had said in a statement in the early hours of Friday morning.

While Washington understood that "there are many strongly held views and appreciate efforts to find a basis to move forward," the top US diplomat would go ahead with plans to leave on Friday, the official added.

"During the leadership meeting... most of the Palestinian factions... rejected restarting peace talks based on Kerry's proposals," Barghuti said.

PLO executive committee member Wasel Abu Yusef said the Palestinian leadership had "decided to form a committee to respond to Kerry's proposals."

"Kerry did not present guarantees to stop settlement building, nor base (peace talks) on 1967 borders," he said.

Kerry's plan would have seen Israel, now ruled by a coalition that has tilted sharply to the right after elections early this year, make only a tacit commitment to slow settlement construction in the occupied territories, not the publicly announced freeze long demanded by Abbas.

On Wednesday, the US envoy had expressed cautious optimism that he was making progress towards a deal to restart talks after his proposals were endorsed by Arab League chief Nabil al-Arabi and senior Gulf Arab diplomats.

But even he had acknowledged that there were still differences over "the language" governing any resumption of talks.

A senior Fatah official said the party wanted changes to what Abbas had agreed.

"Fatah wants to make some alterations to Kerry's plan... because the proposed ideas are not encouraging for a return to negotiations," said the official, speaking on condition of anonymity.

The announcement came after two rounds of intensive talks in Amman between Kerry and Abbas, who is also Fatah leader.

It was the top US diplomat's sixth visit to the region since he took office in February, to try to broker a compromise to resume direct negotiations.

US President Barack Obama on Thursday urged Israeli Prime Minister Benjamin Netanyahu to resume negotiations with the Palestinians "as soon as possible," the White House said.

"The president encouraged Prime Minister Netanyahu to continue to work with Secretary Kerry to resume negotiations with the Palestinians as soon as possible," the White House said in a statement, after the two leaders spoke by telephone.

Kerry on Wednesday had been hopeful of progress.

"Through hard and deliberate, patient work, and most importantly through quiet work, we have been able to narrow those gaps very significantly," he told reporters.

"We continue to get closer and I continue to be hopeful that the two sides will come to sit at the same table."

Kerry's latest peace bid came against the backdrop of Israeli anger at new European Union guidelines for its 28 member states that will block all funding of, or dealings with, Jewish settlements in the occupied West Bank, including annexed east Jerusalem.

Netanyahu on Wednesday called Kerry and warned the EU was "damaging efforts to restart the talks".

The EU office in Israel said on Thursday it was ready to negotiate with Israel regarding their planned entry into force from January 1 next year.