JERUSALEM — Israel will not restrict construction in east Jerusalem, Israel’s prime minister said Sunday hours before he left for Washington, despite a clear U.S. demand that building there must stop and a crisis in relations between the two longtime allies.

Benjamin Netanyahu’s meeting with President Barack Obama Tuesday will be the first high-level meeting since the crisis erupted 10 days ago. It began when Israel embarrassed visiting Vice President Joe Biden by announcing a plan for construction in a Jewish neighborhood in east Jerusalem, which is claimed by the Palestinians.

“As far as we are concerned, building in Jerusalem is like building in Tel Aviv” and there would be no restrictions, Netanyahu told his Cabinet.

This tough stance on Jerusalem has run into stiff opposition in Washington, but there were signs that Israel was working to ease the crisis. Cabinet ministers said that while there would be no formal freeze, construction in Jewish neighborhoods in east Jerusalem would be restricted, like Netanyahu’s partial 10-month West Bank construction freeze.

At stake are the first peace contacts between Israel and the Palestinian government in more than a year.

The Palestinians agreed to mediated talks, but the Jerusalem construction flap has given them second thoughts. Israel said it prefers direct negotiations but would go along with the indirect format.

On Sunday, Netanyahu met with Obama’s special Mideast envoy, George Mitchell, who is set to mediate.

At the meeting with Netanyahu, Mitchell said, “Our shared goal is the resumption of negotiations between Israelis and Palestinians in an environment that can result in an agreement that ends the conflict “

U.S. officials have been dialing back the crisis rhetoric in recent days. The fact that a such a meeting was scheduled — even though the original purpose of Netanyahu’s trip was not to meet Obama but to address a convention of AIPAC, the pro-Israel lobby — is a likely indication that the U.S. and Israel are succeeding in ironing out their differences.

The diplomatic package Netanyahu is offering the U.S. to ease the bilateral crisis has not been made public, but officials say one element is agreement to discuss all the outstanding issues with the Palestinians in indirect peace talks Mitchell is set to mediate. Those would include the future of Jerusalem, as well as borders, Jewish settlements and Palestinian refugees.