For five months, Israeli Prime Minister Binyamin Netanyahu has been fending off U.S. pressure to halt the expansion of West Bank settlements. Now he is reaping dividends for his defiance.

Although Israeli leaders have historically been reluctant to publicly break with the United States for fear of paying a price in domestic support, polls show that Netanyahu's strategy is working. And that means that after months of diplomacy, the quick breakthrough that President Obama had hoped would restart peace talks has instead turned into a familiar stalemate.

Arab states largely have rebuffed Obama's request for an overture to Israel until the settlement issue is resolved -- a stand that Egyptian President Hosni Mubarak emphasized in a meeting with Obama on Tuesday -- and the Palestinians have said a settlement freeze is a precondition for resuming negotiations. Meanwhile, the Israeli public seems to have rallied around Netanyahu's refusal to halt all settlement construction, a backlash that intensified when the Obama administration made clear that it wanted Israel to stop building Jewish homes in some parts of Jerusalem as well as in the occupied West Bank.

In Israel, the dynamic seems to have shifted further from any dramatic concessions. Netanyahu "scored points" for standing up to Obama, said Yoel Hasson, a member of parliament from the opposition Kadima party. In contrast to the United States' public demands for a settlement freeze, signaled early in the relationship between the two new governments, "I think the U.S. understands that it is better for them to do everything with Netanyahu more quietly," Hasson said.

Noting that the Palestinians had negotiated with Israel until late last year despite ongoing construction in the West Bank, Dan Meridor, Israel's intelligence minister, said he found it "strange" that the issue became a precondition for talks after the White House made public demands on Israel.

"I don't think it was intentional, but the result is that this became an obstacle for restarting negotiations," Meridor said in an interview.

The most recent War and Peace Index poll, conducted monthly by Tel Aviv University, showed overwhelming support for Netanyahu's decision to oppose the White House on settlement construction and particularly on building in East Jerusalem. In recent weeks, organizations that favor building houses for Jews in all parts of Jerusalem and the West Bank have steadily become more vocal.

Four members of Netanyahu's cabinet visited unauthorized Jewish outposts in the West Bank on Monday as a show of support, with Strategic Affairs Minister Moshe Yaalon, considered part of the prime minister's inner circle, saying that a reduction of Israel's presence in the West Bank would "bolster terror."

Ateret Cohanim, an organization active in promoting Jewish construction in Jerusalem's contested neighborhoods, this week hosted former Arkansas governor and 2008 Republican presidential candidate Mike Huckabee on a tour of projects -- including a cocktail party at the site of a proposed Jerusalem apartment complex that the Obama administration has singled out for criticism. Huckabee said the trip was arranged in recent weeks as part of a developing response to Obama's demands on Israel.

Members of Congress praised Netanyahu's first months in office on a recent tour of Israel, and even Obama allies such as House Majority Leader Steny H. Hoyer (D-Md.) suggested that the onus was on the Palestinians to open talks with or without a settlement freeze.

"There have been some very positive things that have happened under Netanyahu, and I think that [Palestinian Authority President Mahmoud] Abbas ought to take the opportunity to engage," Hoyer said in an interview last week with the Jerusalem Post while on a trip sponsored by the American Israel Public Affairs Committee, a lobbying group. Despite the administration's concern that construction of Jewish housing in East Jerusalem neighborhoods could prejudge the future boundaries of a city that both Israelis and Palestinians claim as their capital, Hoyer said Jerusalem "is a whole," adding: "My view is that it will remain whole."

"From the point of view of Israeli public opinion, so far Netanyahu has maneuvered quite successfully," said Tel Aviv University professor Ephraim Yaar. His surveys have showed support for Netanyahu in his clash with Obama and distrust of the U.S. president. In his July poll of 512 Israelis, 60 percent said they did not trust Obama "to safeguard Israel's interests," and 46 percent said he favors the Palestinians, compared with 7 percent who think he favors Israel. The poll had a sampling error of plus or minus 4.5 percentage points.

In a June speech, Netanyahu endorsed for the first time the idea of a limited Palestinian state, a position crafted as a response to Obama's call in Cairo for renewed peace efforts in the region.

But so far he has largely pursued the path spelled out when he took office in March -- gradual steps to ease the Israeli military presence in the West Bank, a lifting of some roadblocks and a focus on improving the West Bank economy. He has said he is prepared to resume peace talks with the Palestinians "without preconditions," but he has made clear that he is hesitant to make major concessions while the Gaza Strip remains in the hands of the Islamist Hamas group and while uncertainty persists over Iran's nuclear weapons program.

Israel agreed to a freeze on settlement construction as part of the "road map" agreement signed in 2003. Since then the Jewish population in the West Bank, excluding East Jerusalem, has increased from about 224,000 to about 290,000. The Palestinians and Arab states in the region regard a settlement freeze as a critical step -- an acknowledgment that the Palestinian Authority has improved security in the West Bank, as required under the agreement, and a sign that Israel is serious about allowing the area to become part of a Palestinian state.

On Tuesday, Israeli government officials and anti-settlement activists confirmed that no new bids for government construction had been issued for the West Bank since November -- predating Netanyahu's election by several months. But anti-settlement group Peace Now said government-backed construction accounts for less than half the Jewish building in the West Bank. About 1,000 houses and apartments remain under construction, and there is a backlog of approved projects, the group said.

Opposing Obama's demand for a settlement freeze carried some risk. Israelis generally expect their leaders to maintain good relations with the United States and have punished prime ministers who do not do so -- including Netanyahu during his first term, in the late 1990s, when he clashed with President Bill Clinton.

The two sides are still expected to reach some kind of compromise on the issue, though short of the initial demands made by the White House. Netanyahu is meeting U.S. special envoy George J. Mitchell in London this month, and he expects to meet with Obama when he visits the United States for a U.N. General Assembly meeting in September. Discussion has centered on freezing settlement activity for six months to a year.