US Secretary of State Hillary Clinton has praised Israel for making unprecedented concessions with regard to its settlement of Palestinian territory.

Speaking at a joint press conference with Israel's Prime Minister Benjamin Netanyahu, she said that Israel is setting clear restraints for the building of settlements, which form the main obstacle to the peace process between Israel and the Palestinians.

The Palestinians are only prepared to negotiate if Israel stops building on the West Bank and in East Jerusalem. A spokesman for Palestinian leader Mahmoud Abbas said he does not believe that Israel plans to stop building settlements, insisting that a clear change of course is needed in Israel before the peace process can get under way.