Israel will agree to freeze construction: Clinton

US Secretary of State Hillary Clinton has said Tel Aviv will have a new accord with Washington to temporarily freeze construction in West Bank, even as Israeli Prime Minister Benjamin Netanyahu said on Sunday that the bonds between the two countries are "steadfast". "It is only natural, that within a fabric of friendly relations between allies, there isn't full agreement on all points," Netanyahu told his ministers at a weekly cabinet meeting on Sunday.

"This relationship is important and steadfast. We are trying to reach understandings on various issues so that we can, together, advance our common goals -- peace, security and prosperity for all of the Middle East," the Israeli premier, who is resisting US pressures to halt construction work in West Bank settlements and East Jerusalem, said. Israel will agree to temporarily freeze construction in settlements in the framework of new understandings that Jerusalem will reach with Washington, US Secretary of State Hillary Clinton told European foreign ministers last week, Haaretz reported.

Israeli and American sources confirmed the Clinton's remarks, but they said the deal was not expected to be mentioned publicly in the visit by US President Barack Obama's envoy to the Middle East, George Mitchell, the paper said.

Mitchell is scheduled to meet Defence Minister Ehud Barak on Sunday and will be meeting Palestinian President Mahmoud Abbas on Monday before

holding discussions with Prime Minister Netanyahu on Tuesday. "The magic formula has not yet been struck," a source in the Prime Minister's Bureau said. "The gaps are not big and there are creative proposals on both sides, but the gaps have not yet been bridged," the source was quoted as saying by the Haaretz.

Commenting on Clinton's statement, a senior Israeli official said Clinton had told European foreign ministers that she is "optimistic" about the prospect of reaching an understanding on a construction moratorium in the West Bank. US Defence Secretary Robert Gates is also due to meet Netanyahu and Barak on Monday to discuss missile defence, Iran's nuclear ambitions and bilateral security issues, officials said. Deputy Prime Minister Silvan Shalom also rejected claims of tensions between the United States and Israel saying it "does not in any way reflect reality".

A leading Tel Aviv-based think tank in its report earlier this week claimed that the two close allies were on a "collision course", warning of an imminent crisis in ties. Complying to US pressures, Netanyahu announced support for the creation of an independent demilitarised Palestinian state, couched under severe conditions, but has resisted calls for halting settlement activities or even acknowledging Palestinians' right on Jerusalem.