JERUSALEM Israel and the United States are in a "crisis of historic proportions" over a settlement dispute that has brought relations to a 35-year low, Israel's ambassador to Washington was quoted on Monday as saying.
The comments attributed to envoy Michael Oren clashed with Prime Minister Benjamin Netanyahu's attempts to play down tensions with U.S. President Barack Obama's administration over a West Bank settlement project threatening to derail the renewal of Israeli-Palestinian talks.
"Israel's ties with the United States are in their worst crisis since 1975 ... a crisis of historic proportions," the Yedioth Ahronoth newspaper quoted Oren as telling other Israeli diplomats in a telephone briefing over the weekend.
The remarks, also carried by other Israeli media, appeared to refer to U.S. pressure in 1975 for an Israeli redeployment in the Egyptian Sinai, occupied by Israel since the 1967 war and the site of renewed fighting in 1973.
Israel's Foreign Ministry had no immediate comment.
An Israeli plan to build 1,600 more homes for Jews in West Bank land annexed to Jerusalem was announced during a visit by U.S. Vice President Joe Biden aimed at ushering in indirect peace negotiations with the Palestinians.
Using unusually blunt language, U.S. Secretary of State Hillary Clinton called Israel's behavior "insulting". But in a CNN interview on Friday, she said bilateral ties were "not at risk. I mean, our relationship is durable and strong."
Netanyahu voiced regret on Sunday for what he described as bureaucratic happenstance.
"We know how to deal with these situations -- with equanimity, responsibly and seriously," he said.
Israeli media reported that Clinton, in a telephone call to Netanyahu on Friday, demanded he reverse the decision to construct the settler homes at Ramat Shlomo.
A spokesman for Netanyahu declined to comment. Palestinian officials have said indirect peace talks, which they agreed last week to hold with Israel under U.S. mediation, could not begin unless the settlement project was canceled.
Scrapping the construction could destabilize Netanyahu's governing coalition, dominated by pro-settler parties, including his own.
During his visit to Israel, Biden steered clear of any public demand of Israel to cancel the project. He termed "significant" assurances from Netanyahu that building at the site, a religious settlement, would not start for years.
In Washington, the influential pro-Israel lobbying group, AIPAC, weighed in with a statement that called on the White House to take immediate steps to defuse tension with Israel.
"The Obama administration's recent statements regarding the U.S. relationship with Israel are a matter of serious concern," AIPAC said.
Netanyahu, who has vowed to continue building in and around Jerusalem while reining in construction of Jewish settlements on other occupied land where Palestinians seek a state, is due to attend AIPAC's annual conference in Washington next week.
A U.S. envoy is expected back in the region later in the week to try to get peace talks, suspended since December 2008, under way. Palestinian President Mahmoud Abbas had resisted restarting negotiations without a settlement freeze. (Writing by Jeffrey Heller and Dan Williams; editing by Samia Nakhoul)