Jerusalem (CNN) -- Palestinian leaders said Sunday that they will not proceed with peace talks with Israel unless the Jewish state completely halts settlement construction in the West Bank and East Jerusalem.
"If there is no complete halt to settlement building on all Palestinian land including Jerusalem, we will not accept it," Palestinian Authority President Mahmoud Abbas said Sunday.
But Israeli settlers who are opposed to a freeze on construction demonstrated in Jerusalem Sunday.
About 5,000 people protested for two hours, Israeli police spokesman Mickey Rosenfeld said.
The protest was "the first move in an upcoming struggle," said Benny Katzover, a settler leader in the West Bank.
The demonstration was to press Israeli Prime Minister Benjamin Netanyahu "to stop giving in to pressure and guard the State of Israel," Katzover told CNN.
Last week, an Israeli government source said Netanyahu was insisting on a number of conditions for a settlement freeze -- including that such a the freeze would expire in 90 days -- before presenting a agreement to resume peace talks to his cabinet.
The United States is committed to enticing Israeli and Palestinian leaders back into peace talks, a State Department spokesman said Tuesday.
On Wednesday, Netanyahu's office said that discussions about Jerusalem's territory should also be off the table for the talks. "The Israeli position has been clear all along that building in Jerusalem was, is and will continue," the office said in a statement.
The statement came a week after Netanyahu met with U.S. Secretary of Secretary Hillary Clinton and as details emerged of an American proposal to coax Israel back to negotiations with the Palestinians.
But Abbas distanced himself from any such proposal on Sunday.
"We told the Americans that we have nothing to do with their package which they want to present to the Israelis because they have their own relations," Abbas told Egypt's Nile News TV. "But connecting such deals as conditions to resume negotiations is absolutely rejected by our side."
A reported American proposal to resume talks does not include any limit on Israeli construction in East Jerusalem, a source of major conflict between Palestinians and Israelis.
The statement from Netanyahu's office said that the prime minister hopes to wrap up talks soon with the U.S. administration and present to his cabinet a proposed agreement on settlement building "that will reflect the understandings that were achieved with Secretary of State Clinton."
Other Palestinian leaders also said Sunday that they were unprepared to reenter peace talks without a broad settlement freeze.
"The Palestinian leadership had decided (it) will go to talks if Israel completely halts settlement construction in the Palestinian territories including East Jerusalem and any partial settlement freeze is not going to be welcomed and accepted by the Palestinian leadership," Mohamad Shtayeh, a Fatah Central Committee member and a member of the Palestinian negotiating team, told CNN.
CNN's Kareem Khadder and Michael Schwartz contributed to this report.