Israeli Prime Minister Benjamin Netanyahu sought to deflect rising criticism at home over stalled peace talks Monday by telling Israeli lawmakers that it was the US, not Israel, that rejected a settlement freeze extension this past fall.

"There was an American decision not to follow the track,'' said a government official who confirmed the remarks but was not authorized to speak for attribution. "The reporting out there that Israel rejected the American package is simply erroneous.''

The rare attempt to rehash the recent breakdown in negotiations with the Palestinians comes in response to recent allegations in the press and among political allies that Mr. Netanyahu bears responsibility for the current deadlock and hasn't done enough to move negotiations forward.

Five largest Israeli settlements: Who lives there, and why

Faced with a successful Palestinian drive to enlist countries to recognize a sovereign Palestinian state – with or without a peace deal, he is increasingly seen as putting Israel on the defensive – and leading it toward further isolation internationally.

Labor threatens to withdraw from coalition
Though the prime minister blames the Palestinians for making a settlement freeze a precondition for talks, leaders of the dovish Labor Party on Monday threatened to withdraw from the government if there's no progress on the talks. After months of grumbling, the party is currently debating how soon to set a vote on possible withdrawal. Some are pressing for a vote as soon as this month.

"If we see no progress, the sooner we go the better,'' said Trade Minister Benjamin Ben Eliezer.

While a Labor withdrawal would not bring down Netanyahu's government, it would destabilize the prime minister by leaving him with a narrower majority. It would also recast his government in the public mind as uniformly hard-line rather than a mix of left and right.

"If the Labor party leaves, that's terrible for [Netanyahu]. He doesn't want to be the leader of a government of settlers and the ultra-Orthodox,'' says Gil Hoffman, a political reporter for the Jerusalem Post. "He has to create an impression that something is happening."

Mr. Netanyahu is scheduled to visit Egypt later this week to discuss the peace process with President Hosni Mubarak.

In response to remarks over the weekend by Palestinian Authority President Mahmoud Abbas that a peace treaty could be worked out within two to three months, the Israeli prime minister said that he would be open to marathon negotiations until a deal is reached.

Netanyahu loses support from his own Likud party
The US announced several weeks ago that it was abandoning a request for Israel to enact a new settlement freeze to persuade Mr. Abbas to negotiate a deal on borders and security. Though Netanyahu raised with cabinet members the idea of a freeze in return for military hardware and political support, the deal was never finalized.

Five largest Israeli settlements: Who lives there, and why

On Monday, the Israeli daily newspaper Maariv reported in a front-page article that Netanyahu ignored unspecified peace proposals submitted several times by the Palestinians. Though spokesmen for Netanyahu denied the report, the malaise has seeped into his Likud party.

"I haven't heard any statement from him on what do we want regarding the settlements, regarding the borders or Jerusalem. We are only reacting,'' says Shlomo Madmon, a Likud activist. "[Mr. Abbas] is smart. He has gotten the whole world against us. He is building a state and has left us as peace refuseniks.''