Benjamin Netanyahu, the Israeli prime minister, will convene an emergency session of his cabinet on Friday amid signs that the Jewish state was strengthening its defiance of the United States.
By Adrian Blomfield in Jerusalem
Mr Netanyahu and his ministers will discuss a series of demands made by President Barack Obama to end a damaging row over Jewish building in east Jerusalem.
There was no word on what response the inner cabinet would formulate but there seemed to be little prospect of a resolution to the stand-off -- indeed, there were signs that relations between the United States and Israel, already at their most strained in many years, were deteriorating ever more rapidly.
Far from signalling their willingness to accommodate Mr Obama's chief concerns, senior members of Mr Netanyahu's Right-wing coalition indicated their determination to press ahead with settlement construction in parts of Jerusalem that Israel annexed after the 1967 Six-Day war.
"I thank God that I have been given the opportunity to be the minister who approves the construction of thousands of housing units in Jerusalem," Eli Yishai, Israel's hawkish interior minister, said ahead of the cabinet meeting.
Mr Netanyahu was subjected to a humiliating dressing-down at the White House on Tuesday during which Mr Obama reportedly presented him with a list of 13 demands the United States wanted fulfilled in order to end the crisis.
As he flew back to Israel on Thursday, Mr Netanhayu tried to sound upbeat.
"I think we have found the golden path between Israel's traditional policies and our desire to move forward to peace," he told reporters.
Yet, while Mr Netanyahu is likely to agree to make some "confidence building" gestures towards the Palestinians, a gulf remained on the key issue dividing Israel and the United States: Jewish construction in east Jerusalem.
White House officials acknowledged continuing "disagreements" between President Obama and Mr Netanyahu. Shimon Peres, the Israeli president, was blunter, saying that the prime minister had failed "to reach an understanding with the United States".
Mr Netanyahu's ministers urged him to stand firm by rejecting US calls to reverse the construction of 1,600 new homes in east Jerusalem's Ramat Shlomo settlement, the announcement of which triggered the row.
"If we blink now, we will lose everything, and when that happens the government will collapse," said Silvan Shalom, one of Israel's deputy prime ministers.
Were Mr Netanyahu to agree to halt Jewish building in east Jerusalem, seen by Palestinians as their future capital, there is a risk that at least one of the more radical parties in his Right-wing coalition could withdraw.
While aware of such a possibility, Mr Obama is understood to have told the prime minister that he can either choose to ingratiate himself with his coalition partners or commit to serious peace talks by accepting his demands.
The Palestinian leadership has indicated its unwillingness to join indirect peace talks unless settlement construction in the West Bank and East Jerusalem is fully frozen, a step it says Israel is obliged to make under commitments made during previous negotiations.
The centrist Kadima party, which won the most seats in last year's general election, yesterday offered to join the ruling coalition should one its pro-settlement rivals pull out.
For the moment, at least, Mr Netanyahu has shown no inclination to modify his government and many members of his Likud party will bitterly oppose bringing Kadima into the coalition.