JERUSALEM: Israeli Prime Minister Benjamin Netanyahu has vowed not to freeze settlement construction in the West Bank, according to one of his ministers quoted by the Jerusalem Post newspaper.

“I heard the prime minister say with my own ears that he has no intention of freezing construction in the settlements or in Jerusalem,” the English-language daily quoted minister without portfolio Yossi Peled as saying.

“He said there is no agreement to freeze construction in the settlements. I am telling you this first-hand,” said Peled, who accompanied Netanyahu on a visit to Europe last week.

“Jews should be able to live wherever they want,” he told members of Netanyahu’s hawkish Likud party on Tuesday evening.

Peled was not immediately available to comment on his remarks in the Jerusalem Post.

On Sunday Netanyahu said he had not yet made any decision on the US demand that Israel freeze all settlement activity on occupied Palestinian land as part of efforts to jump-start the stalled Middle East peace process.

Recent media reports suggested Israel would agree to a nine-month freeze in the occupied West Bank but not in annexed east Jerusalem. Palestinians have insisted they would not accept a partial settlement freeze.

Netanyahu fail-ed to seal an understanding during a London meeting last week with US Middle East envoy George Mitchell.

Israel and the Palestinians on Wednesday held their highest-level talks since Netanyahu took office, focusing on economic issues while formal peace negotiations remained stalled. “We hope that away from politics, we will be able to do something on the ground to improve the economic realities of Palestine,” Palestinian Economy Minister Bassem Khoury said with Israeli Vice Prime Minister Silvan Shalom at his side.

Israel has been easing travel restrictions for Palestinians in the West Bank in a declared bid to shore up President Mahmoud Abbas and the local economy, while maintaining a blockade of the Gaza Strip, an enclave run by Hamas.

“I think that the Palestinians have understood that there is no point in continuing to boycott the talks with Israel and that these talks will not be conditioned by any concessions on our part,” Shalom told reporters. But in the West Bank, Nabil Abu Rdainah, a spokesman for Abbas, reaffirmed the Palestinian position that peace talks, suspended since December, could not resume without an Israeli commitment to freeze settlement in the occupied West Bank.

He said the Jerusalem meeting, the first between Israeli and Palestinian Cabinet ministers since Netanyahu’s government was inaugurated in March, “fell within the framework of economic issues and was not related to political negotiations.”

Later in the day in New York, Mitchell planned to meet two Israeli officials as part of his push to restart negotiations leading to a peace deal and Palestinian statehood.

US President Barack Obama has taken the public stance that Israel must halt all settlement activity under a 2003 peace “road map.” Palestinians say settlements, built on land Israel occupied in a 1967 war, could deny them a viable state.