The US State Department is trying to play down the rift with Israel, describing the two countries as strategic allies despite a dispute over Jewish settlements.
Israeli prime minister Benjamin Netanyahu says the construction of 1,600 new homes will go ahead in east Jerusalem despite US condemnation.
America’s ambassador to Israel, Michael Oren, has been reported as saying the relationship is at its lowest point in 35 years.
US State Department spokesman PJ Crowley says it is waiting for a formal response from Israel about the settlements.
“Israel is a strategic ally of the United States and will continue to be so,” he said.
The dispute has cast a cloud over indirect peace talks between the Palestinians and Israel.