Clinton's meeting with Netanyahu came one day after her announcement in Washington via a digital video conference with Palestinian Prime Minister Salam Fayyad of an additional 150 million dollars in aid to the Palestinian Authority.

U.S. Secretary of State Hillary Rodham Clinton (L) and Israeli Prime Minister Benjamin Netanyahu meet in New York, November 11, 2010. [Xinhua]

At the video conference, Clinton described Israel's efforts to build more units in east Jerusalem as "counterproductive" to the peace efforts, but the joint statement on Thursday made no reference to the new housing construction plans.

In an encounter with the media before their meeting in New York, Clinton ducked a reporter's question on the housing plans, saying only that both Netanyahu and Palestinian leader Mahmoud Abbas were "very committed to the two-state solution and we're going to find a way forward."

The Israeli government on Monday approved new construction tenders for over 1,300 apartments it plans to build in East Jerusalem, prompting a furious reaction from the Palestinians, who wish to establish their own state with East Jerusalem as the capital.

The Palestinians called for Israel to extend the 10-month moratorium on settlement building in the West Bank which expired in late September but was rejected by Netanyahu, prompting Abbas to quit direct negotiations with Netanyahu, which were restarted in early September in Washington under the auspices of the administration of U.S. President Barack Obama.

Obama acknowledged on Wednesday that "enormous obstacles" remain in the peace process but stressed that Washington would continue to work toward the goal of setting up an independent Palestinian state living side by side in peace with Israel.