Jerusalem - Israeli Prime Minister Benjamin Netanyahu said Sunday he intends in the coming days to present his plans for achieving peace with the Palestinians.

"Our aim is to achieve peace in the Middle East and understandings with our friends in the world, foremost among them the United States," he told ministers at the weekly cabinet session in Jerusalem.

The premier's announcement comes amid signs of a growing dispute with the United States over Israeli settlement activity in the occupied West Bank, which Washington demands cease immediately.

Israel Radio reported Sunday that Netanyahu will reject a call for a total settlement freeze when he meets US envoy George Mitchell, who arrives in the region on Monday.

On Saturday Israel rejected a statement by Secretary of State Hillary Rodham Clinton which dismissed Israeli claims that the administration of President George W Bush had agreed to allow some construction in existing settlements to allow for so-called "natural growth."

Any informal or oral agreements on the subject did not become part of US policy, she said.

In 2004 Bush acknowledged, in a letter to then-Israeli premier Ariel Sharon, that it was not realistic to expect Israel to pull back completely to the de facto borders which existed prior to the outbreak of the June 1967 war, when Israel conquered the West Bank from Jordan.

Israel interpreted the letter as meaning that under any peace agreement it could retain large blocks of settlements close to the borders.

Israeli opposition leader Tzipi Livni told Israel Radio Sunday morning that a distinction had to be made between the settlement blocks and the desire to expand settlements.

She said the policies of the Obama administration regarding settlements were not new, and the US had never supported Israeli settlement activity. (dpa)