Jerusalem's mayor has delayed plans to build an Israeli archaeological park that would require demolition of Palestinians' homes in the city's disputed eastern sector.
Nir Barkat says he agreed Tuesday to a request from Prime Minister Benjamin Netanyahu to hold more talks with Palestinian residents about the park before construction starts.
Mr. Netanyahu's office says he asked the mayor to delay the project out of concern it could be used to "distort" Israel's international image.
The United States says it appreciates Mr. Netanyahu's intervention. State Department spokesman P.J. Crowley says the U.S. is urging the Israelis and Palestinians to refrain from unilateral actions that undermine trust.
The project calls for the demolition of dozens of Palestinian homes to make way for tourist attractions, new shops and local amenities.
Palestinian officials in the West Bank say the project is another attempt by Israel to tighten control over East Jerusalem, which they claim as the capital of a future state.
Separately, Mr. Netanyahu said Tuesday he will oppose any peace deal with the Palestinians that calls for Israel to pull out of the Jordan Valley, a key part of the West Bank. He said Israel will not cede the land bordering Israel's border with Jordan because it is too important strategically. Palestinians are seeking all of the West Bank for their future state.
U.S. State Department spokesman Crowley said Washington believes Israel and the Palestinians are "getting closer" to starting a dialogue that can resolve their complex disputes. The United States has offered to mediate indirect talks between the two sides in an effort to revive the peace process, which has been stalled for more than a year.
Palestinian President Mahmoud Abbas met with Arab foreign ministers in Cairo Tuesday to discuss the U.S. proposal.
Some information for this report was provided by AP.