Israel's defense minister is trying to downplay differences with the United States over the future of Israeli settlements in the West Bank.

Ehud Barak told Israel Radio Wednesday that, despite differences, the two countries are closer to an understanding that would satisfy officials on both sides, while also focusing on a regional peace agreement.

The U.S. has called for a freeze on settlement building but Israeli Prime Minister Benjamin Netanyahu wants to build within existing settlements to accommodate the "natural growth" of families.

George Mitchell (l), the U.S. special envoy to the Middle East, and Israeli Defense Minister Ehud Barak, pose for photos before their meeting in New York, 30 Jun 2009

Barak met with special U.S. Middle East envoy George Mitchell in New York late Tuesday.  Barak says a meeting between Mitchell and Mr. Netanyahu could take place later this month.

Meanwhile, the head of the United Nations aid agency for Palestinian refugees, Karen Koning AbuZayd is calling on Israel to lift its blockade of the Gaza Strip.

She says conditions in Gaza are getting worse because Israel is limiting the types of supplies allowed in.

Israel has enforced a tight blockade of Gaza since the Palestinian militant group Hamas seized control of the territory in 2007.

On Tuesday the Israeli navy ordered a small ship carrying humanitarian aid to Gaza to turn back. 

Organizers of the group, Free Gaza Movement, said the vessel left Cyprus bound for the Palestinian territory with 21 activists on board.

The group has been intercepted twice before but made five successful missions to Gaza since last year.