US fears major diplomatic embarrassment if Israelis and Palestinians collide in New York over looming request at UN for recognition of Palestinian statehood

The United States, Europe and the Middle East quartet are engaged in a last-ditch effort to set up a fresh round of Israeli-Palestinian peace talks in an attempt to head off a major diplomatic embarrassment over the looming Palestinian request for recognition of statehood at the UN.

The US is leading diplomatic pressure on Israeli and Palestinian leaders in a bid to persuade the parties back to negotiations rather than risk a damaging collision in New York next week. Secretary of state Hillary Clinton is in telephone contact with the three delegations in the region, who are co-ordinating their efforts.

Washington is keen to avoid carrying out a threat to veto a Palestinian request for full membership of the UN, a move likely to further damage America's already battered reputation in the Middle East, particularly following its strong backing for moves towards self-determination in the region this year.

But some at the heart of the diplomatic manoeuvres believe that it is now too late to stop the Palestinians taking their case to the UN and are concentrating on damage limitation by seeking a clear position for a return to the negotiation table after the world body meets.

The Palestinians insist that they will not be diverted from making a formal request at the security council for full member status, and that diplomatic interventions have come too late. They claim to be resisting pressure, which included President Obama this week describing their move as "counterproductive".

Washington, fearing isolation in wielding its veto, is seeking support from Britain in particular in its stand against the Palestinian resolution if it comes to a vote. Two other security council members, Russia and China, have openly backed the Palestinian move. France is sympathetic to the Palestinian demand but is seeking a compromise resolution that could be supported by Germany, which is opposed to UN recognition of a Palestinian state, in the hope of forging a common EU position.

Britain has so far not declared how it would vote but diplomatic sources say that it is torn between American pressure to support the US position in the security council and concerns about what such a move would do to the UK's standing in a changing Middle East, particularly while it is still heavily involved in Libya.

The former British prime minister, Tony Blair, now special envoy of the Middle East quartet, was Wednesday working on a text to put to Israeli and Palestinian leaders outlining a basis on which talks might resume.

He was liaising with EU foreign affairs chief Catherine Ashton and US special envoys David Hale and Dennis Ross in the region, and by telephone with Clinton. The former British prime minister expects to remain in the Middle East until flying to New York at the weekend.

The Palestinian president, Mahmoud Abbas, has said he will take the request for full recognition as a state to the UN security council next week. But some Arab and European nations are pressuring him to downgrade the request to the general assembly, which can only offer observer status to the Palestinians, to save Washington the embarrassment of having to wield its veto.

The Palestinians insist their approach to the UN does not preclude a return to negotiations later. "We see no contradictions between doing both," said Dr Mohammad Shtayyeh, a senior member of the team heading to New York. The UN bid was "the beginning of the game, not the end. It is a process".

But diplomatic efforts to secure a breakthrough on a return to talks are constrained by Palestinian demands of guarantees that any future negotiations would be based on the pre-1967 borders plus a total settlement freeze. Israel is unlikely to sign up to that.

The International Crisis Group warned this week that any climbdown by the Palestinians now "could decisively discredit [Mahmoud Abbas's] leadership, embolden his foes and trigger unrest among his people". It went on: "Most Palestinians do not strongly support the UN bid; but they would strongly oppose a decision to retract it without suitable compensation."

Israel was also making last-minute efforts to persuade undeclared countries not to vote for a Palestinian resolution, although it has acknowledged it will lose a vote at the general assembly. The Palestinians claim to have the support of around 130 countries so far, just beyond the two-thirds majority needed for a resolution to succeed.

Israeli ministers have threatened retaliatory measures should the Palestinian bid succeed. They include tearing up the Oslo accords, under which the Palestinian Authority was given control of parts of the West Bank and Gaza, annexing the West Bank settlements and withholding tax revenues that Israel collects on behalf of the PA. The US Congress is also threatening to cut off financial aid to the Palestinians.