WASHINGTON: Israeli Prime Minister Benjamin Netanyahu met President Barack Obama at the White House after warning US demands on freezing Jewish settlements could delay Middle East peace talks for a year.

The high-stakes meeting between Obama and the Israeli leader lasted 90 minutes, an administration official said, but Netanyahu stayed on for another two hours at the White House before leaving the West Wing in a limousine.

There was no immediate comment from either side on the tone or the substance of the talks.

Earlier, Netanyahu had shown no sign of caving in to US demands to halt the construction of new settler homes in east Jerusalem, which sparked what some analysts have described as the worst row between the allies for years.

"If the Americans support the unreasonable demands made by the Palestinians regarding a freeze on settlements in east Jerusalem and the West Bank, the peace process risks being blocked for a year," Netanyahu said.

"Relations between Israel and the United States should not be hostage to differences between the two countries over the peace process with the Palestinians," he was quoted as saying by Israeli media.Chronology: US-Israeli relations since 1991

Netanyahu declared late Monday in a passionate speech to the powerful US-Israel lobby AIPAC that "Jerusalem is not a settlement," spelling out an apparent message of no compromise towards Obama.

The United States has warned that building more Jewish settler homes in annexed east Jerusalem directly undermines its credibility as a mediator and efforts to get "proximity" talks started between Israel and the Palestinians.

Washington reacted angrily when Israel's government announced the construction of 1,600 settler homes in east Jerusalem while Vice President Joe Biden was visiting the country.

Despite Netanyahu's apology over the timing of the announcement, the row has rumbled on for two weeks -- with neither side showing signs of backing down.

Even as Tuesday's White House meeting went ahead, it emerged in Israel that local officials had given final approval for the building of 20 apartments for Jewish settlers at the site of a former Palestinian hotel in east Jerusalem.

A Jerusalem city spokesman described any attempts to use the announcement to damage Netanyahu's visit to the United States as "provocations."

"Once the construction permits have been paid for they are automatically issued," the spokesman said on public radio.

Underlying the delicate nature of the talks between Obama and Netanyahu, the leaders did not hold a photo opportunity or speak to reporters.

Netanyahu says he is simply following the policies of all Israeli governments since 1967, when Israel won a war with its Arab neighbors and seized east Jerusalem, which it later annexed in a move not recognized by any major world power.

Israel claims all Jerusalem as its eternal capital. The Palestinians want to make the predominantly Arab eastern sector of the city the future seat of their state.

Deepening the sense of crisis Tuesday, the Palestinians warned Netanyahu's position threatened to destroy hopes for serious peace negotiations.

"What Netanyahu said does not help American efforts and will not serve the efforts of the American administration to return the two sides to indirect negotiations," Palestinian Authority spokesman Nabil Abu Rudeina said.

Netanyahu's visit unfolded as his government was embroiled in another row, this time with Britain, over the use of fake British passports by an Israeli hit squad blamed for killing Hamas commander Mahmud al-Mabhuh in Dubai.

Britain ordered the expulsion of an Israeli diplomat over the affair. Israel, which has denied its spy agency Mossad was to blame, said it was disappointed at the decision.

Netanyahu was also active on Capitol Hill, as Israel's staunch allies in the US Congress stepped up pressure on Obama to back off.

Eric Cantor, the number two Republican in the House of Representatives, told AFP Obama should show he was "serious" about ending the row with Israel by holding a joint press availability at the White House.

Cantor was among lawmakers who met with Netanyahu a few hours before his White House stop.

Despite her criticism of settlements, Secretary of State Hillary Clinton told AIPAC Monday that US support for Israel's security is "rock solid, unwavering, enduring and forever."

Washington and Israel may be closer to agreement on Iran, with Washington vowing to organize biting international sanctions on Tehran over its nuclear program -- though Israel appears to view the showdown with more urgency than the US side.