Prime Minister Benjamin Netanyahu will convene his forum of top ministers on Tuesday afternoon to debate extending Israel's moratorium on construction in West Bank settlements for 60 days.

The concession would be made in exchange for a series of reported U.S. guarantees in Israel's direct peace negotiations with the Palestinians. Israel halted construction temporarily for 10 months, a freeze that ended on September 26.

Open gallery view Construction work in Elazar, a settlement in the Gush Etzion bloc, in July 2010. Credit: AP

The Palestinians have said they would not continue the recently renewed negotiations unless Israel agreed to halt construction again. The Obama administration has urged Israel to reconsider its refusal of that demand.

If Netanyahu succeeds in convincing the Forum of Seven to accept an extension of the construction freeze, he plans to bring the matter to the political-security cabinet for a vote later Tuesday.

Defense Minister Ehud Barak (Labor) and Intelligence and Atomic Energy Minister Dan Meridor (Likud) are expected to support Netanyahu's position, while Foreign Minister Avigdor Lieberman (Yisrael Beiteinu) is likely to present the greatest opposition.

Netanyahu is pinning his hopes now on Ministers Benny Begin (Likud), Moshe Ya'alon (Likud) and Eli Yishai (Shas). The prime minister has already met with Begin over the last few days in an attempt to convince him to change his previously expressed opposition to extending the freeze.

The prime minister has an interest in reaching a cabinet decision on the matter before the Arab League follow-up committee meets in Libya on Friday to deliver its own stance on whether peace negotiations should continue.

Secretary of State Hilary Clinton spoke on Sunday with Netanyahu in an effort to reach a solution to the settlements construction deadlock.

State Department spokesman Philip Crowley defined the conversation as very constructive, refusing to get into details.

They discussed ideas on a path forward, he said. We continue to encourage the parties and consult with the parties on a path forward. We recognize that this is difficult. We are facing an obstacle that immediately confronts us. We know there will be others as we move through this. But we will maintain our intensive dialogue with the parties in the coming days.

Crowley would not comment directly on whether Netanyahu would raise the moratorium extension to ministers the next day.

Netanyahu told ministers earlier Monday that Israel and the United States were holding behind-the-scenes talks geared at resolving a recent deadlock in Middle East peace talks with the Palestinians, adding that peace was Israel's vital interest.

The prime minister said that Israel was "in the midst of sensitive diplomatic contacts with the U.S. administration in order to find a solution that will allow the continuation of the talks."

"We will quietly consider the situation and the complex reality away from the spotlights," the premier said, advising fellow cabinet members to be "patient, act responsibly, calmly and - above all - quietly. This is exactly what we must do."

Netanyahu also reiterated his commitment to the latest round of direct peace talks, saying that Israel had fully "lived up to our commitment, a difficult commitment that we took upon ourselves"

"Now there is interest in continuing the peace negotiations," the premier added, saying peace was "a vital interest for the State of Israel."

Netanyahu's comments came as a report by the London-based newspaper Asharq al-Awsat quoted Israeli officials as saying earlier Monday that Netanyahu had agreed to extend Israel's freeze on settlement construction by two months.

The Asharq al-Awsat report came amid recent claims that U.S. President Barack Obama had offered Netanyahu an incentive package in exchange for keeping settlement construction at bay, a move which could quell Palestinian concerns over settlement building and consequently bring them back to the negotiations table.

According to Israeli sources quoted in the report, Netanyahu expressed his preliminary approval to extend Israel's moratorium on settlement building, adding that he conditioned such a move on a list of U.S. assurances, which included a continued IDF presence in the Jordan valley and continued U.S. political and military support.

Sources quoted in the Asharq al-Awsat piece also said Netanyahu claimed that the assurances listed would aid him in the face of the widespread internal opposition expected to such a move.

Speaking at a meeting of Likud ministers which took place shortly before a cabinet meeting in Jerusalem on Monday, Netanyahu made a possible reference to the Asharq al-Awsat report, saying that the time was not ripe "for issuing statements."

"We have no interest in causing an uproar, Neither do I have the possibility of denying the baseless media report," Netanyahu said, adding that he had "an interest in responding calmly and responsibly in order to advance the diplomatic process."

Last week, the White House denied that Obama sent Netanyahu a letter proposing a set of U.S. guarantees to Israel in exchange for Israel extending a freeze on settlement construction in the West Bank for another two months.

"No letter was sent to the Prime Minister. We are not going to comment on sensitive diplomatic matters, said Benjamin Chang, the deputy spokesman for the White House National Security Council.

It is not clear, however, whether Obama could have made the offer via means other than a letter.

Obama's letter was said to include a long list of American favors in exchange for an extension of the settlement building freeze, which ended this week. Most of these favors are critical to Israel's strategic security needs that Netanyahu has been demanding for years.

Other commitments that Obama reportedly offered Netanyahu in the letter include an agreement not to ask for any more building freeze extensions, an agreement to veto any anti-Israel UN Security Council resolution in the next year, and an agreement that the future fate of the settlements be dealt with only as part of a final status agreement with the Palestinians.

Obama's letter was said to include additional commitments, including a series of guarantees to prevent the smuggling of weapons and missiles into a Palestinian state, a lengthy period of interim security arrangements in the Jordan Valley and a comprehensive regional defense pact for protection from Iran to follow the establishment of the Palestinian state.

The American president also reportedly vowed to upgrade Israel's security capabilities and increase the three billion dollar security aid package that Israel receives annually. The letter included commitments to advanced weapons and early warning systems, including satellites.