New York  - Palestinian Prime Minister Salam Fayyad reiterated Tuesday that there could be no restart to peace talks with Israel unless there is a complete freeze of settlement activity in the West Bank.

Only a halt to settlement building would give the peace process a realistic chance of succeeding, Fayyad said after a three-way meeting in New York between US President Barack Obama, Israeli Prime Minister Benjamin Netanyahu and Palestinian President Mahmoud Abbas.

"If this is not possible, how can we consider the peace process credible?" said Fayyad, who attended a separate donor conference for the Palestinian Authority at the UN.

The settlement issue has been the major stumbling block towards relaunching peace talks, which Obama had hoped to announce this week during his meeting with the two Middle East leaders.

Israeli President Shimon Peres earlier Tuesday said the Palestinians should not expect an end to all Israeli settlement activities.

"What do the Palestinians expect? That we announce that East Jerusalem is a settlement?" he asked rhetorically, adding there was "no chance" that Israel would agree to do so.  dpa