Jerusalem/New York  - Israel and the United States are closer to settling their dispute over Israeli settlement construction, Israel's Defence Minister Ehud Barak said in an interview broadcast Wednesday.

He told Israel Radio that the dispute needed to be seen within a wider context, as part of a regional arrangement with the Palestinians and other Arab countries.

This was discussed during his four-hour meeting in New York with US Middle East envoy George Mitchell on Tuesday night, he said.

The US is demanding Israel halt all settlement activity in the occupied West Bank.

But Israel, which has said it will not build new settlements or expropriate more West Bank land, insists on going ahead with construction inside existing settlements, to deal with so-called "natural growth" of their populations.

The meeting between Barak and Mitchell came after a parley, originally set for last Thursday, between the US envoy and Israeli Prime Minister Benjamin Netanyahu, was cancelled.(dpa)