JERUSALEM - ISRAEL'S Defence Minister Ehud Barak will propose a limited three-month freeze on settlement growth in response to increased pressure from Washington, Israeli army radio reported on Sunday.

Mr Barak, who is to meet US Middle East envoy George Mitchell in New York on Monday, will propose the limited freeze as a compromise to Washington's demand for a complete halt to settlement activity on occupied land, it said.

US President Barack Obama's administration has repeatedly demanded that Israel's new right-wing government halt all settlement growth in the occupied West Bank in order to relaunch peace talks with the Palestinians.

But Israeli Prime Minister Benjamin Netanyahu has refused to take steps to halt so-called 'natural growth' within existing settlements that Israel expects to keep in any final peace deal.

And the possible freeze would not apply to settlements in mostly Arab east Jerusalem, which Israel occupied and annexed in 1967 and which the Palestinians have demanded as the capital of their future state.

It would also not cover some 2,000 buildings in West Bank settlement blocs that are currently at an advanced stage of construction, mainly public buildings, Israel's Yediot Aharonot newspaper reported.

The paper recently reported that about 3,200 new housing units were under construction in the West Bank at the end of 2008. A defence ministry spokesman declined to comment on the reports.

The presence of more than 280,000 Israeli settlers in over 100 settlements scattered across the West Bank has long been one of the thorniest issues in the decades-old conflict.

Palestinian president Mahmud Abbas has said he will not hold any talks with Israel until it halts all settlement activity, which he says endangers the viability of a future Palestinian state.

The international community considers all settlements built on land occupied in the 1967 Six Day war to be illegal, and last week the Group of Eight and the Middle East Quartet - the United States, the United Nations, the European Union and Russia - called for a complete settlement freeze. -- AFP