WASHINGTON  President Obama’s criticism of new Israeli housing plans for East Jerusalem, and Prime Minister Benjamin Netanyahu’s even sharper retort, have thrown the Middle East peace talks into jeopardy, with the dispute over Jewish settlements looming as a seemingly insuperable hurdle.

The Obama administration is struggling to restart direct negotiations between the Israelis and Palestinians, which stalled last month after the expiration of a partial freeze on settlement construction in the West Bank. Secretary of State Hillary Rodham Clinton plans to meet Mr. Netanyahu in New York on Thursday, while Egypt sent two top officials to Washington to discuss ways to salvage the process.

But the brusque exchange between Mr. Obama and Mr. Netanyahu reflected again the gulf between Israel and the United States over settlements  an issue Mr. Obama initially made the centerpiece of his Middle East diplomacy. Palestinian officials said Israel’s latest announcement threatened the talks and could prompt a unilateral declaration of a Palestinian state.

When asked in about Israel’s plans for 1,000 housing units for a contested part of East Jerusalem, Mr. Obama said, “This kind of activity is never helpful when it comes to peace negotiations.”