Reporting from Jerusalem and Washington Richard Boudreaux -- President Obama and top Israeli officials staked out sharply opposing positions over the explosive issue of Jewish settlements Thursday, propelling a rare dispute between the two close allies into full public view just days before the U.S. leader is due to deliver a long-awaited address in Egypt to the world's Muslims.

Speaking after a White House meeting with Palestinian Authority President Mahmoud Abbas, Obama reiterated that he had been "very clear about the need to stop building settlements, to stop building outposts" on Palestinian territory.

Only hours earlier, the Israeli government said it would continue to allow some growth in the settler communities in the West Bank.

The exchange underscored the unusually hard-line position Obama has taken publicly with Israel early in his administration. Most U.S. presidents, aware of the political sensitivity, have worked hard to keep disagreements out of sight, when they existed.

The back and forth also added a contentious note to the start of a grueling period of Middle East peace talks that the White House has pledged to aggressively pursue. And it comes as Obama prepares his speech scheduled for next week that is aimed at repairing U.S. ties with the Muslim world.

The verbal disagreement with Israel defied expectations of U.S. and Israeli officials, as well as many analysts, who had predicted that the new American president and the newer conservative Israeli prime minister would seek a pragmatic way to avoid public clashes.

But since Obama met with Israeli Prime Minister Benjamin Netanyahu at the White House 11 days ago, the contrasts have steadily risen in public view.

Obama believes an Israeli settlement freeze would elicit concessions from moderate Arab states, reinvigorating peace negotiations.

In staff-level talks that continue almost daily, Israeli officials have balked.

Meeting with Abbas, Obama re-emphasized his conviction regarding the settlements and the need for a Palestinian state. The president repeated his view, which many Israelis also dispute, that progress on Palestinian-Israeli peace can ease many other regional problems.

"I have insisted that this is a critical issue to deal with, in part because it is in the United States' interest to achieve peace," Obama said. "The absence of peace between Palestinians and Israelis is an impediment to a whole host of other areas of increased cooperation and more stable security for people in the region as well as the United States. And so I want to see progress made, and we will work very aggressively to achieve it."

In the meeting between Obama and Netanyahu, the differences between the two leaders were clear. By contrast, Obama appeared to be in agreement Thursday with Abbas on most subjects the two discussed. He praised the Palestinian government for its cooperation on security and its dealings with its rival, Hamas.

The net effect was to make the Israeli government appear to be the holdout.

Beyond the question of Jewish settlements, differences between Obama and Netanyahu loom over the crucial issue of a separate Palestinian state. The Israeli leader would favor a stand-alone state only if it did not have many sovereign powers, including a military and control of its borders.

Pressing his stance, Obama appeared at some points to be appealing directly to the Israeli public as he sat beside the Palestinian leader and answered several questions from reporters.

"I believe that many Israelis share the same view that time is of the essence, and we can't continue with the drift," he said. "We need to get this thing back on track."

Israeli officials have said they would take apart 26 small outposts, and have dismantled three in the last week. But they have said that "natural growth" -- a vaguely defined term -- should be allowed in the larger settlements. The settlements themselves are almost universally seen by the world community as a violation of international law. In all, about 300,000 Israelis now live in about 120 settlements.

Obama also held out hope that the United States and Israel would be able to bridge their differences.

"I think it's important not to assume the worst but to assume the best," he said. "Obviously, Prime Minister Netanyahu has to work these issues in his own government."

Nearly two decades ago, President George H.W. Bush and his administration split openly with the Israeli government over the issue of settlements, damaging his relations with Congress and with staunchly pro-Israel groups in the United States.

His son, President George W. Bush, once said he had learned a lesson from his father's experience, and took care to keep disagreements -- if any -- in private.

Aaron David Miller, a former U.S. Mideast peace negotiator, said the Obama administration's policy represented "potentially a radical break" with past U.S. policies on settlements.

"They seem to have decided there's not going to be any nickel-and-diming," Miller said. "They're just going to lay it out."

Israeli analysts and commentators too have been struck by the degree of public disagreement between the allies since Netanyahu's White House meeting, and the Israeli leader's discomfort with the tension.

"There can be no doubt that the meeting between Netanyahu and Obama significantly rattled the prime minister," Sima Kadmon wrote Thursday in the Israeli newspaper Yediot Aharonot.

On Wednesday, Secretary of State Hillary Rodham Clinton forcefully underscored the administration's call for a settlement freeze, saying the administration stance provides for no exceptions.

Palestinian officials said Abbas would not meet with Netanyahu to begin peace discussions until the prime minister froze all settlement growth, acknowledged the goal of a Palestinian state and agreed to abide by commitments of previous Israeli governments.

Saeb Erekat, the chief Palestinian negotiator, said in an interview that the Palestinian Authority would continue its regular contacts with the Israelis on economic and security matters, but that it would not discuss political issues until the Netanyahu government agreed to the requirements.

"We are waiting to hear, and so far they are not saying it," Erekat said. "That's a problem."

Israeli officials have complained that they are willing to meet with Abbas unconditionally, while the Palestinians are setting preconditions.

Meanwhile Thursday, Israeli forces in the West Bank killed a senior Hamas militant after a nine-year manhunt. The Israeli military said Abed Majid Duddin, 45, head of Hamas' military wing in Hebron, opened fire on soldiers and police who had surrounded his hide-out near the city and called on him to surrender.

Obama noted Thursday the split in governance, which has Abbas' Palestinian Authority in charge in the West Bank and Hamas in the Gaza Strip.

"I very much appreciate that President Abbas has been under enormous pressure to bring about some sort of unity government and to negotiate with Hamas," Obama said, noting that Abbas recognizes Israel's right to exist. Hamas, an Islamic militant group, does not.

Obama is to deliver his speech to the Muslim world June 4 in Cairo. He told reporters Thursday that he planned to discuss Mideast peace but would not delve into the specifics of his settlement proposal.

"I want to use the occasion to deliver a broader message about how the United States can change for the better its relationship with the Muslim world," he said, and would emphasize the contributions of Muslim Americans, a point he said is often overlooked.