Israel said it was deeply grateful to the United States on Saturday after it vetoed a United Nations resolution put forward by the Palestinian leadership condemning Israeli settlement activity. "Israel deeply appreciates the decision by President Obama to veto the Security Council Resolution", Prime Minister Benjamin Netanyahu's office said in a statement.

Israel was "prepared to pursue negotiations vigorously" and was "eager to get on" with Israeli-Palestinian peace talks, the premier's office said. The "decision by the US makes it clear that the only path to such a peace will come through direct negotiations and not through the decisions of international bodies," it continued.

Open gallery view Barack Obama and Benjamin Netanyahu at the White House on September 1, 2010. Credit: AP

The United States voted against a United Nations Security Council draft resolution on Friday that would have condemned Israeli settlements as illegal. The veto by the U.S., a permanent council member, prevented the resolution from being adopted.

The other 14 Security Council members voted in favor of the draft resolution. But the U.S., as one of five permanent council members with the power to block any action by the Security Council, struck it down.

The resolution had nearly 120 co-sponsors. The Obama administration's veto is certain to anger Arab countries and Palestinian supporters around the world.

The U.S. opposes new Israeli settlements but says taking the issue to the UN will only complicate efforts to resume stalled negotiations between Israel and the Palestinians on a two-state solution.

Palestinians say continued settlement building flouts the internationally-backed peace plan that will permit them to create a viable, contiguous state on the land after a treaty with Israel to end its occupation and 62 years of conflict.

Israel says this is an excuse for avoiding peace talks and a precondition never demanded before during 17 years of negotiation, which has so far produced no agreement.

Peace talks between Israel and the Palestinians began in September but collapsed just three weeks later when a partial Israeli freeze on construction of Jewish settlements in the West Bank expired. The Palestinians have said they will not return to the negotiating table until Israel renews the freeze