Prime Minister Benjamin Netanyahu was forced this week to freeze plans to construct 24,000 new homes in the West Bank following American and Palestinian protests over the move.

The Housing Ministry, headed by Minister Uri Ariel from the Jewish Home party, had been on the point of publishing tenders for several building projects in the settlements.

However, the plans had not been not co-ordinated with the Prime Minister’s office. Once they came to light, the US administration demanded “urgent” clarifications from Israel on the subject and, on Wednesday, the Palestinian negotiating team resigned in protest.

After threatening to cut off the peace talks, Palestinian President Mahmoud Abbas, told Egyptian TV station CBC that he would consider naming a new negotiating team.

Israel opposed a freeze on settlement building as a precondition to the talks that began four months ago, but there has been a de-facto agreement to minimise construction. New settlements have been authorised in limited numbers, usually at the same time as Israel has released Palestinian prisoners.

Following the publication of the settlement plan on Tuesday, Mr Netanyahu instructed Mr Ariel to put the tenders on hold and to co-ordinate all future announcements of building plans with his office.

The settlements issue is one of the factors that the Americans and Palestinians point to as hindering the talks.

Last week, US State Secretary John Kerry criticised Israel for the building plans and, in an unusual public rebuke, said: “If we do not resolve the question of settlements and the question of who lives where and how and what rights they have; if we don’t end the presence of Israeli soldiers perpetually within the West Bank; then there will be an increasing feeling that if we cannot get peace with a leadership that is committed to non-violence, you may wind up with leadership that is committed to violence.”

He warned that “the alternative to getting back to the talks is the potential for chaos. I mean, does Israel want a third intifada?