CAIRO (AFP) - Arab League chief Amr Mussa Monday accused Israel of sabotaging US efforts to restart Middle East peace talks and said he backed the Palestinians' refusal to negotiate until Israel halted settlement activity.

Mussa told AFP he feared Washington's diplomatic push had been brought back "to the starting point" due to Israel's refusal to halt settlement building in the West Bank, a Palestinian precondition for the resumption of talks.

"It has brought us back to the starting point," Mussa, who is in Marrakech for an Arab foreign ministers meeting, told AFP in a phone interview.

"We have clear fears. Israel wants to resume negotiations without preconditions. It wants to remove the issue of Jerusalem (from negotiations), without stopping settlements," he said.

"There are a lot of consultations to see what should be done in the light of the position taken by Palestinian president Mahmud Abbas not to resume negotiations before a halt to settlements, which is sensible and has Arab backing," he said.

Mussa meanwhile told the BBC in an interview that he feared the US diplomatic efforts were on the verge of failing.

"I'm really afraid that we are about to see a failure. But still wait until we have our meetings and decide what we're going to do. But failure is in the atmosphere all over," he said.

He added that he hoped "the (US President Barack) Obama administration will not accept this slap on the face and that they will try harder and in a firmer way."

Washington had urged a total halt to new Israeli construction in the West Bank but on Saturday US Secretary of State Hillary Clinton said Israeli Prime Minister Benjamin Netanyahu's offer to restrict new building, while allowing existing settlements to expand, was "unprecedented".

Clinton on Monday called on Israel to make greater efforts to ease tensions with Palestinians and said the United States still opposes new Jewish settlements in the West Bank.

The top US diplomat, who is on a tour to relaunch Middle East peace talks, also praised efforts by Abbas to improve security and said Israel must reciprocate.

Abbas, who met Clinton in Abu Dhabi on Saturday, insisted that he will not agree to resume peace talks without a complete freeze on Jewish settlement construction, lead negotiator Saeb Erakat said.

The top US envoy is meeting Arab foreign ministers in Marrakech as the US pressures Abbas to resume the talks, a key foreign policy goal of the Obama administration.

Arab countries have backed Abbas and refused US calls to begin normalising ties with Israel ahead of a peace deal.

The Egyptian official news agency MENA reported on Monday that Foreign Minister Ahmed Abul Gheit had repeated his support for Abbas's position in a phone conversation with Clinton.

The settlements in the West Bank and East Jerusalem, which Israel occupied in 1967, house about 400,000 settlers and are considered a violation of international law, which forbids colonising occupied land with civilians.

Palestinians say the settlements will prevent them from forming a Palestinian state in the West Bank and the Gaza Strip, which Israel left in 2005 after 38 years of occupation, withdrawing about 8,000 settlers.