American officials fear that if Israel allows the settlement freeze to expire, the Palestinians will carry through on a threat to abandon direct peace talks launched just this month with the backing of U.S. President Barack Obama.

"The discussions are pretty intense right now," said Jeffrey Feltman, U.S. assistant secretary of state for Near Eastern affairs.

"We are urging Israel to extend the moratorium and we are also making clear to the Palestinians that we do not believe that it is in their interest to walk out of the talks."

Clinton met Israeli Defense Minister Ehud Barak on Monday, and has held several discussions with other Middle East leaders on the sidelines of this week's United Nations General Assembly meeting in New York, officials said.