"The president clearly told him that if there is no halt to the settlements, we will not be able to continue with the negotiations," said Palestinian spokesman Nabil Shaath.

"For us the question of the settlements is the primordial issue. It governs the continuation or the halt of the negotiations," he told journalists after direct peace talks resumed for the first time in 20 months.

"Major differences over the settlement issue still divide us. The Israelis told us that it was difficult for them to make a decision" on whether to extend the freeze on settlement construction," Shaath said.

Israel has imposed a 10-month freeze on building new settler homes on Arab lands which expires on September 26.