Top US diplomat John Kerry met Israeli Prime Minister Benjamin Netanyahu on Tuesday at the tail end of three days of talks to piece together a plan for resuming Middle East peace negotiations.

During the visit, his second trip to the region in as many weeks, Kerry said he was pursuing a "quiet strategy" for ending decades of mistrust between the two sides, who have not met for direct talks since September 2010.

Netanyahu and Kerry met at David's Citadel Hotel in Jerusalem on Tuesday morning, after what the secretary of state said were "very productive" dinner talks late on Monday.

"We made progress ... and each of us agreed to do some homework" with the aim of "seeing how we can really pull all of the pieces together," he told reporters as Netanyahu stood next to him.

"I'm determined not only to resume the peace process with the Palestinians, but to make a serious effort to end this conflict once and for all," the Israeli leader said.

Questions of "recognition and security" were key issues, he said, referring to Palestinian recognition of Israel as a Jewish state.

So far, Kerry has been tight-lipped on specifics but has said one area of focus is bolstering the teetering Palestinian economy, saying movement in areas like the economy "could be critical to changing perceptions and realities on the ground, all of which can contribute to forward momentum."

He is scheduled to leave for London mid-afternoon to attend a meeting of G8 foreign ministers.

But he looked set for an uphill struggle, with Israeli officials pessimistic his shuttle diplomacy would work, suggesting it would merely trigger a resurgence of the "blame game," public radio said.

Israel's army radio said Netanyahu's government would refuse a Palestinian request to hand over a map of the future borders and also dismissed the idea of making any "significant goodwill gestures" to convince the Palestinians to return to talks.

And it looked unlikely there would be any flexibility on the flashpoint issue of Jewish settlement building, with Housing Minister Uri Ariel ruling out any construction freeze in annexed east Jerusalem or the West Bank.

"We are building and we will continue to build everywhere," said the minister just hours after announcing that another 50 new homes would be built in east Jerusalem which would be earmarked for Holocaust survivors.

Ariel belongs to the hardline pro-settler Jewish Home, which is one of the main partners in Netanyahu's rightwing coalition government.

Palestinian president Mahmud Abbas has ruled out any return to negotiations while Israel continues to build on land they want for a future state.

Israel's top-selling Yediot Aharonot newspaper said Kerry was trying to get the sides to sit down for a four-way meeting in Amman but until now Abbas had flatly refused "unless Israel first took some sort of meaningful action."

In talks with Kerry on Sunday, Abbas said securing Israel's agreement to release Palestinian prisoners was a "top priority" for resuming talks, and a top aide said he was also looking for Netanyahu's agreement that the 1967 lines would be the basis for negotiations—a condition rejected by the Israeli leader.

In parallel to Kerry's efforts, Arab states are also seeking ways of reviving peace moves, with Abbas attending a meeting of the Arab Peace Initiative committee in Doha on Monday.

The Arab Peace Initiative, first proposed in 2002 by Saudi King Abdullah, offers pan-Arab diplomatic recognition of Israel in return for an end to the occupation and the establishment of a Palestinian state.

An API delegation is due to visit Washington at the end of this month for top-level talks.

Meanwhile, US Defence Secretary Chuck Hagel is due to visit Jerusalem on April 21 on his first trip to the region since taking over as Pentagon chief, with talks set to focus on Iran's nuclear programme and the crisis in Syria, army radio said.

In a separate development, Turkey delayed talks with Israel over compensation the Jewish state will pay to the families of victims of a deadly 2010 raid on a Gaza-bound flotilla, in a blow to diplomatic efforts by Kerry.

Talks were due to begin on April 12, but were pushed back to April 22, an Israeli official said, citing "logistical reasons."

Two weeks ago, Israel and Turkey patched up a nearly three-year diplomatic rift after Netanyahu apologised for a raid on a Gaza-bound flotilla which killed nine Turks, with Kerry on Sunday saying it was "imperative that the compensation component be fulfilled, that the ambassadors be returned."