The clock is ticking for George Mitchell.

The top US envoy to the Middle East yesterday again failed to reach agreement with Benjamin Netanyahu, the Israeli prime minister, on a suspension of Jewish settlement construction in occupied territory that Palestinians want for their future state.

Mr Mitchell is trying to wrap up a settlements deal before next week, when the UN General Assembly takes place in New York. Barack Obama, the US president, had hoped to arrange for a tripartite meeting along with Mr Netanyahu and Mahmoud Abbas, the president of the western-backed Palestinian Authority, at the event.

Mr Mitchell, who arrived in Israel on Saturday to meet with senior Israeli and Palestinian officials, saw the Israeli premier on Tuesday and extended his stay by a day to resume talks with him again yesterday. After their discussion, Mr Netanyahu’s office issued a statement describing the meeting as “good” and adding that the two men would again convene tomorrow.

Mr Mitchell pressed Mr Netanyahu this week to wrap up details of the pact that the US hopes could help kick-start stalled Arab-Israel peace talks.

The US emissary has been trying to put together a package, under which Israel would agree to a moratorium on settlement activity and Arab nations would take initial steps to recognise Israel. Such steps include allowing Israeli airlines to fly over their airspace or land in their airports, as well as reopening Israeli trade offices.

Disagreements between the two sides on the settlements issue centre on Washington’s demand that a building lull last for at least a year while Israel insists on about six months, as well as on Israel’s opposition to Washington’s plan for a two-year time frame for peace negotiations, Israeli media reported yesterday.

Mr Netanyahu has also held firm to instituting only a limited construction suspension that would not include East Jerusalem and would allow for the building of some 3,000 housing units in the West Bank that have already been approved and are currently at different stages of the construction process.

Analysts said a pact that would include those demands would help Mr Netanyahu soften opposition to a building suspension within his predominantly right-wing governing coalition.

Yossi Alpher, a prominent Israeli commentator, said: “So far, Netanyahu has manoeuvred successfully to at least get from Mitchell and the administration a settlement freeze which he can sell to his own coalition, constituency and settler friends as a farce.”

However, Mr Alpher said, the Palestinians appear to be standing in the way of such an agreement, possibly holding it up. Indeed, Mr Abbas has repeatedly said he will not attend the three-way meeting unless Israel institutes a total freeze of settlement activity.

But at the end of the day, Mr Alpher said he expects a breakthrough in the talks. He added: “If I had to bet on it now … I would say there will probably be some last-minute deal that would bring them to the UN and, ostensibly at least, launch a new round of Israeli-Palestinian negotiations because nobody wants to let Obama down.”

But the Palestinians may not be the only ones to back down on some stances.

Some analysts say Israel may also be more hard-pressed to give in to demands by the US and Europe on halting the settlements following the release on Tuesday of a report by a UN committee charging the country with committing war crimes and possibly crimes against humanity during its attacks in Gaza in December and January. Yesterday, Israel launched a diplomatic offensive to convince western countries to speak out against the report’s findings, and may feel obliged to make more concessions on the settlements issue in return.

Should the US and Israel clinch a settlements deal, such a pact may spur a resumption of Israeli-Palestinian peace talks that, some experts say, will only succeed with the involvement of Mr Obama.

George Giacaman, a professor at Birzeit University in the West Bank, said in an interview with bitterlemons.org, a website devoted to Israeli-Palestinian dialogue: “If Palestinians and Israelis are left to negotiate on their own, the balance of power is such that … new talks will fail. Therefore, the role of the third parties will be crucial, particularly of the Obama administration.”

According to Mr Giacaman, Mr Obama’s efforts to reignite Arab-Israeli talks come at a crucial time for the peace process. He said: “This is the last chance for the two-state solution. I don’t think we can expect, after 18 years of negotiations, another 18 years of negotiations.” Failure of the talks, he added, will lead to “renewed and continued conflict”.