Israeli Prime Minister Benjamin Netanyahu flew to Washington on Tuesday for peace talks with the Palestinians, leaving up in the air the question of future Jewish settlement construction once a partial freeze ends.

The Palestinians have threatened to pull out of the face-to-face peace negotiations, due to begin on Thursday, unless Israel extends the moratorium on new housing starts past its expiration date of September 26.

Netanyahu, who heads a government dominated by pro-settler parties including his own, has given no sign he will continue to curb construction of homes for Jews in the occupied West Bank but told his Likud party a peace deal was possible.

I am not naive. I see all the difficulties and hurdles and despite this, I believe that a final peace agreement is a reachable objective. Of course, this does not depend just on us, he said on Monday.

Netanyahu added that he hoped to find a brave partner in Palestinian President Mahmoud Abbas.

Israeli Defence Minister Ehud Barak met Abbas in secret in Amman on Sunday, Israel Radio said, although it did not give details of the talks and said Barak reported back to Netanyahu.

In a high-profile drive for peace, which contrasts with low expectations amongst Israelis and Palestinians, U.S. President Barack Obama will host Netanyahu, Abbas, Jordan's King Abdullah and Egyptian President Hosni Mubarak at a dinner on Wednesday.

Israeli-Palestinian peace talks are due to resume, after a 20-month break punctuated by Israel's Gaza war, on Thursday with a ceremony at the State Department.

Israeli Vice Premier Silvan Shalom said on Sunday that Netanyahu had told cabinet ministers there would be no decision on the settlement issue, which could split his governing coalition, before the Jewish New Year starting on Sept 8.

SETTLEMENT BLOCS

Some Netanyahu allies have raised the possibility of limiting most future construction in settlements to those within major blocs that Israel intends to keep in any peace agreement.

Palestinians have rejected the idea, saying it would amount to accepting Israeli sovereignty over the enclaves.

Netanyahu, who has pushed along with the United States for direct talks without preconditions, has said the future of settlements should be resolved in negotiations which Washington hopes can lead to a Palestinian statehood accord within a year.

Many analysts view that goal as unrealistic, citing Israeli and Palestinian internal political divisions and the complexities of issues, including settlements and the fate of Jerusalem, that have defied solution over decades of conflict.

The United States opposes settlement expansion but has stopped short of calling for Israel to extend the moratorium. Instead, it has urged both Israel and the Palestinians not to take measures that could jeopardise the negotiations.

Some 500,000 Israelis and 2.5 million Palestinians live in the West Bank and East Jerusalem, areas Israel captured in a 1967 war.

The Palestinians aim to found a state in the West Bank, where Abbas's Palestinian Authority holds sway, and Gaza, controlled by Hamas Islamists opposed to his peace efforts.

(Editing by Charles Dick)

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