Israel says Obama peace envoy could return Sunday

JERUSALEM (Reuters) - President Barack Obama's Middle East peace envoy may return to the region on Sunday, having postponed his trip over an Israeli settlement plan, an Israeli official said on Thursday.

George Mitchell's visit had been expected to usher in indirect Israeli-Palestinian talks, but that has been thrown in doubt by Palestinian anger -- echoed in Washington -- at the blueprint for 1,600 more homes for Jews near East Jerusalem.

Israeli Defence Minister Ehud Barak's office said he spoke by phone on Wednesday with Mitchell, who had originally planned to come on Tuesday. Barak oversees the occupied West Bank, which abuts East Jerusalem -- parts of an envisaged Palestinian state.

"They discussed the various means and possibilities for solving the crisis and activating negotiations between Israel and the Palestinians," Barak's office said in a statement.

"In addition, the two discussed the possibility of Mitchell arriving this coming Sunday."

The U.S. embassy said it was aware of the reported conversation but had no information on Mitchell's travel plans.

A Mitchell mission next week could clash with the scheduled trip by Israeli Prime Minister Benjamin Netanyahu to a meeting of a pro-Israel lobby in Washington. Whether he would also see Obama administration officials has been a matter of speculation.

After an Israel visit last week by U.S. Vice President Joe Biden was marred by the settlement announcement, the administration said it had called on the Netanyahu government to show it was committed to peacemaking with the Palestinians.

As of Wednesday, when U.S. Secretary of State Hillary Clinton departed for a meeting of international Middle East mediators in Russia, no response had been received from Netanyahu, a State Department spokesman said.

Israeli media reports said Clinton wanted Israel to shelve the housing plan and agree to discuss core statehood issues with the Palestinians once indirect peace talks began. Netanyahu has said he would not curb building for Jews anywhere in Jerusalem.

(Writing by Dan Williams; Editing by Jon Boyle)