Chief Palestinian negotiator Saeb Erekat has played down hopes of a resumption of peace talks with Israel.

He said negotiations could not continue while Israeli settlement building continued in occupied territories.

He was speaking after US secretary of state Hillary Clinton urged both sides to resume peace talks as soon as possible and without preconditions.

She said other questions should be dealt with before the settlement issue. Israel has yet to respond to her move.

The Israeli government has refused Palestinian demands for a complete halt to settlement building in the West Bank and east Jerusalem, which it occupied during the 1967 Israeli-Arab war.

But it has limited building work for 10 months in the West Bank, excluding east Jerusalem.

Erekat said: "You cannot have discussions on borders while the territory you want to set up your state on is being eaten up by the settlements."

He said the Palestinians were waiting for the arrival in the region later this month of US special envoy George Mitchell.

Clinton said on Friday that first agreeing the borders of a future Palestinian state would deal with Palestinian concerns about settlement building.

"Resolving borders resolves settlements; resolving Jerusalem resolves settlements," she said.

Her comments came after talks with Jordan's foreign minister Nasser Judeh.

Clinton also met Egypt's foreign minister Ahmad Abulgheith in Washington.

Meanwhile, the Israeli prime minister held talks in Egypt, and the Saudi foreign minister was in Syria.

With her remarks, Clinton launched round two of the Obama administration's push for peace in the Middle East, say commentators. Last year, all the parties got bogged down in the details of an Israeli settlement freeze and the US was unable to break the deadlock. This time the end game remains the same, but the starting point seems to have changed – Washington is now pushing the parties to go straight to talks about borders.