West Bank - Palestinian President Mahmoud Abbas told U.S. President Barack Obama he would not run for re-election unless Israel dropped its refusal to freeze settlements, Palestinian officials said on Tuesday.

Abu Mazen (Abbas) told him that he would not be a candidate in the presidential election (in January) unless Israel abided by the peace requirement, said one of the officials, who are briefed regularly by Abbas and spoke on condition of anonymity.

The officials said Abbas made the comments to Obama to vent his anger at what Palestinians see as an easing of U.S. pressure on Israel over construction of homes for settlers in the occupied West Bank and East Jerusalem.

However, Tayyeb Abdel-Rahim, a senior aide to the Western-backed Palestinian leader, issued a denial and described the telephone conversation between Abbas and Obamas as warm and candid.

Abbas, who has made a return to peace talks conditional on Israel ceasing settlement activity in line with a 2003 peace road map, has threatened to step down on occasions in the past.

But Palestinian officials who gave details of his exchange with Obama voiced doubt he would do so now. Abbas's Fatah party, trounced by Hamas Islamists in a 2006 election, does not have another presidential candidate in polls planned for January 24.

The Palestinian relationship with the U.S. administration is very tense, one of the Palestinian officials said. They have retreated from their previous position.

The U.S. Consulate in Jerusalem and chief Palestinian negotiator Saeb Erekat had no immediate comment.

At a meeting with Abbas and Israeli Prime Minister Benjamin Netanyahu in New York last month, Obama urged Israel to show restraint over settlements -- a step back from his original demand for a construction freeze under the road map that charts a course toward Palestinian statehood.

Netanyahu has ruled out a complete suspension of building within settlements, saying the needs of growing families must be accommodated.

Now, Palestinian officials said, Washington is urging the Palestinians to resume peace talks, suspended since December, without a settlement freeze.

ENVOY'S RETURN

You negotiated with (former Israeli Prime Minister Ehud) Olmert while settlement activities continued. What's the difference now?, one of the officials quoted U.S. Middle East envoy George Mitchell as having told Erekat.

Mitchell is expected to return to the region later this week to continue his pursuit of a formula to revive peace talks.

In a Voice of Palestine radio interview on Monday, Erekat said negotiations with Israel were unlikely to resume in the near future, an assessment echoed by Israeli officials.

He blamed Israel for the impasse and urged Washington to do the same.
Netanyahu has called on Abbas to begin talks immediately without preconditions. Abbas has said he was simply asking that Israel meets its obligations under the road map.

Israeli government officials have expressed doubt Abbas could show flexibility toward Israel before the Palestinian presidential and parliamentary elections in three months' time. (Additional reporting by Ali Sawafta in Ramallah; Writing by Jeffrey Heller in Jerusalem; Editing by Alison Williams)

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