Israel has reached an understanding with the U.S. government, said the spokesman of Prime Minister Benjamin Netanyahu, Nir Chefetz, in an interview with Army Radio on Friday.

Chefetz said that Netanyahu had reached a "list of understandings" on policy toward Palestinians with U.S. President Barack Obama in their talks in Washington.

The prime minister's spokesman added that there were additional points still in disagreement between the sides.

"The construction policy will not change, but Israel is prepared to make additional steps in order to advance peace talks," said Chefetz.

Chefetz was speaking ahead of the seven-member inner cabinet meeting later on Friday, where Netanyahu will discuss his meetings in the United States and debate making gestures to Palestinians to revive negotiations.

Soon after Chefetz made the comments, the government issued a clarification, however: Any understanding with the U.S. did not mean American backing for Israeli construction in east Jerusalem.

Spokesman Mark Regev said that when Chefetz said understandings had been reached, he was "articulating the Israeli position, he is not articulating a joint position".

Netanyahu will convene his seven-member inner cabinet Friday, in an effort to formulate a common position on the understandings reached in recent days by Netanyahu's advisers and senior White House officials. At the current time, it seems highly unlikely that the so-called forum of seven reach a common position that is anywhere close to the American demands.

A senior source at the prime minister's bureau said Thursday that "it will probably take two or three meetings before any kind of consensus is reached between the seven over the American demands."

Netanyahu is reportedly concerned that any softening of his stance on the issue of Jerusalem or gestures to the Palestinians will result in a harsh response from the right flank of his coalition - especially Foreign Minister Avigdor Lieberman. Ministers Eli Yishai, Benny Begin, and Moshe Ya'alon share Lieberman's rightist stance of Lieberman.

Defense Minister Ehud Barak, who played an important role in overcoming the crisis in relations between Jerusalem and Washington, will emphasize in Friday's discussions that Israel's security is in great part dependent on cooperation with the Obama administration on the Palestinian question.

Netanyahu returned Thursday from Washington having failed in all the tasks he had set for himself - primarily in rebuilding trust in his relationship with President Barack Obama.

Prior to departing for Israel Netanyahu declared that there had been progress in the talks with the U.S. administration. "We are paving the golden path that will link between the wish to advance the peace process and our national interests," Netanyahu said. Several hours later the White House spokesman said that progress had been achieved in important subjects.

Notwithstanding efforts by Netanyahu's aides and the White House to show that progress had indeed been made in the meetings between the two sides, the crisis between the prime minister and the president is perceived to have deepened and is based, in part at least, on Obama's feeling that Netanyahu is not a reliable partner for the peace process.

For his part, the prime minister appears to be unable to understand what it is the Americans want from him: "What is this fight about? What they want from me?" he told aides in a closed meeting.

Throughout his three-day visit to the United States, Netanyahu sought to give the impression that the entire dispute revolved over the issue of construction in East Jerusalem, assuming that this would rally the support of America's Jewry and of Congress.

The prime minister went around Washington with a large map of Jerusalem and at every opportunity tried to show his interlocutors just why he claims it is impossible to freeze construction in the capital. "It is impossible to strangle this city," he would say.

However, the demands the Americans have made go far beyond the issue of Jerusalem; they now include more than was demanded by Secretary of State Hillary Clinton two weeks ago.

Obama would like Israel to make good-will gestures to the Palestinians Authority, including the release of prisoners held in Israeli jails and the transfer of territory to the control of the Palestinian security forces.

The president would also like to receive clarifications on the construction policy of Israel in the West Bank after the end of the 10-month settlement construction freeze, which is due to expire in September. In addition, the Americans want to know to what degree the prime minister intends to monitor construction in East Jerusalem and whether he is willingness to take responsibility for implementing any government decision on this matter.

Most importantly, however, Obama wants to know how serious Netanyahu is in moving toward a peace agreement with the Palestinians. The president wants Netanyahu to put in writing his position on future discussions on the Palestinian demand for an Israeli withdrawal to the 1967 lines and to commit to the completion of talks within a two year time table.
 
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