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Clinton made the appeal in a speech days after the Obama administration admitted it had failed to persuade Israel to renew a freeze on settlements in the West Bank, effectively ending direct peace talks launched three months ago.

She urged both sides to get to the heart of the issues dividing them even if they cannot agree to meet face-to-face because the Palestinians first demand a halt to settlements, both in the West Bank and East Jerusalem.

“It is time to grapple with the core issues of this conflict: on borders and security, settlements, water and refugees, and on Jerusalem itself,” Clinton told an audience that included key US, Israeli and Palestinian players.

“In the days ahead, our discussions with both sides will be substantive, two-way conversations, with an eye toward making real progress in the next few months on the key questions of an eventual framework agreement,” she said.

Administration officials say that despite the initial setback the parties can still reach a framework agreement that settles the core issues a year after the direct talks were launched in September.

“The United States will not be a passive participant,” Clinton said in her speech at the Brookings Institution’s Saban Center for Middle East Policy.

“We will push the parties to lay out their positions on the core issues without delay, and with real specificity,” she said.

“We will work to narrow the gaps, asking tough questions and expecting substantive answers. And, in the context of our private conversations with the parties, we will offer our own ideas and bridging proposals when appropriate.”

She acknowledged that direct talks were still required to reach a framework agreement, but she expected that both sides, after tackling some of the core issues, would re-establish enough trust to return to face-to-face talks.

The speech sought to overcome the hurdle posed by settlements, which have hamstrung the peace talks ever since President Barack Obama’s administration backed Palestinian demands for a halt to settlements nearly two years ago.

The direct talks were launched in Washington on September 2 only to bog down weeks later when a 10-month Israeli freeze on settlements in the West Bank lapsed and the Palestinians refused to return to the negotiating table.

Clinton spokesman Philip Crowley earlier conceded the two sides would no longer be holding the direct talks they launched three months ago with the aim of achieving a framework agreement on the core issues within a year.

But he declined to label them “indirect talks,” which is what they were when US envoy George Mitchell served as a mediator between the two sides from May to September during his bid to launch the direct negotiations.

There was little sign of progress, meanwhile.

Chief Palestinian negotiator Saeb Erakat emerged earlier from an hour of talks with Clinton saying it was “premature to speak about a course of action” after the failure on settlements and again blamed Israel for the deadlock.

“The Israeli government had a choice between settlements and peace and they chose settlements,” Erakat told reporters outside the State Department.

Erakat told AFP he held talks on Thursday with Mitchell, his assistant David Hale and Assistant Secretary of State Jeffrey Feltman over the failed US attempt to secure a new settlement freeze.

In the meeting, Erakat reiterated that the Palestinians would not negotiate without a complete cessation of all settlement building in the occupied Palestinian territories, especially in east Jerusalem.

Mitchell is due to return to the Middle East on Monday for talks with Israeli Prime Minister Benjamin Netanyahu and Palestinian president Mahmud Abbas, Crowley said.

In her flurry of consultations here, Clinton was also due to meet with Palestinian prime minister Salam Fayyad, and Israeli Defense Minister Ehud Barak.

US officials said she also met with Tzipi Livni, head of Israel’s centrist opposition Kadima Party.

These talks follow sessions with Israel’s chief peace negotiator Yitzhak Molcho on Thursday.