Israel and the United States are taking steps to defuse the deepest diplomatic rift between the two countries for decades.

Yesterday, the US secretary of state, Hillary Clinton, made it clear that she was expecting Israel to offer the concessions needed to resume peace talks, although she softened the angry rhetoric of the last few days.

She told reporters: "We are engaged in very active consultations with the Israelis over steps that we think would demonstrate the requisite commitment to the process. It's been a very important effort on their part as well as ours. We know how hard this is. This is a very difficult, complex matter. But the Obama administration is committed to a two-state solution."

The Israeli newspaper Haaretz reports that the US expects an official response to Clinton's demands. These demands include the cancellation of the Ramat Shlomo construction project in East Jerusalem, goodwill gestures towards the Palestinians, and a statement of commitment to matters of substance in peace talks.

The rift began last week during US-vice president Joe Biden's visit to Israel. His trip was aimed at reigniting peace talks, but during his visit, Israel announced that it would build 1,600 new Jewish homes in East Jerusalem, one of the occupied territories.