JERUSALEM (AFP) – The United States wants Israel to commit to a one-year freeze on settlement activity, arguing that this would facilitate Arab concessions in the peace process, the Haaretz newspaper reported on Thursday.

The proposal was made by US Middle East envoy George Mitchell in talks last week with Israeli Prime Minister Benjamin Netanyahu, the newspaper said, though the premier’s spokesman dismissed the report as “mere media speculation.”

Haaretz noted that Arab states want a guaranteed end to the building of settlements in occupied territories before they will take steps towards normalisation of ties with Israel.

Mitchell asked for a freeze of at least one year, but Israel agreed to suspend construction in settlements for six months at most, the paper said, citing “a senior source” in Jerusalem.

The Israelis also say any deal would have to allow for the completion of 2,500 housing units under construction in the West Bank, while Mitchell wants the number to be brought down as much as possible.

It remains unclear what would happen at the end of the freeze period, the daily said.

Haaretz said talks on the proposal will continue when Netanyahu and Mitchell meet again in London on August 26.

The settlement issue is one of the thorniest in the Middle East peace efforts and the administration of US President Barack Obama has pressed Israel to respect past commitments to freeze all construction in West Bank and east Jerusalem settlements.