Israel's prime minister has abruptly halted a plan to explore the potential construction of thousands of new homes in West Bank settlements, Belfast Telegraph said.

Benjamin Netanyahu said the move had created an "unnecessary confrontation" with the international community that threatened to weaken his campaign against Iran's suspect nuclear programme.

The plan announced by Israel's Housing Ministry earlier yesterday, November 12 had prompted a Palestinian threat to walk out of U.S.-brokered peace talks and drew angry criticism from officials in Washington, who said they had been blindsided by the move.

In a statement, Netanyahu said he had asked his housing minister, Uri Ariel, to "reconsider" the plan. He noted that Ariel, a member of the pro-settlement Jewish Home Party, had drawn up the plan "without any advance co-ordination".

"This step does not contribute to settlement. On the contrary, there is damage here for settlement," Netanyahu said.

"This is a meaningless step - legally and in practice - and an action that creates an unnecessary confrontation with the international community at a time when we are making an effort to persuade elements in the international community to reach a better deal with Iran."

The statement said Ariel had accepted the request.

The issue of settlement construction has been at the heart of a standstill in peace efforts in recent years.

The Palestinians claim the West Bank, east Jerusalem and the Gaza Strip, territories captured by Israel in 1967, for an independent state. They say Israeli settlement construction on occupied lands is a sign of bad faith.

More than 500,000 Israelis live in the West Bank and east Jerusalem. Israel withdrew from Gaza in 2005.

The ministry refused to say how many of these homes were in settlements, but the anti-settlement watchdog group Peace Now, which closely monitors construction activity, said the plans included nearly 20,000 apartments in the West Bank and 4,000 in east Jerusalem.

Peace Now says Netanyahu's government has given final approval for nearly 3,500 new homes in Jewish settlements since taking office last March. In addition, it has promoted plans for nearly 9,000 additional homes.