Prime Minister Benjamin Netanyahu announced on Wednesday evening that Israel would impose a 10-month freeze on construction in West Bank settlements, saying the move was a bid to restart stalled peace talks with the Palestinians.
"I hope that this decision will help launch meaningful negotiations to reach a historic peace agreement that would finally end the conflict between Israel and the Palestinians," Netanyahu said at a special press conference he held shortly after the security cabinet approved the moratorium.
He added: "We have been told by many of our friends that once Israel takes the first meaningful steps toward peace, the Palestinians and Arab states would respond."
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Settlement building has been a key sticking point in U.S. efforts to restart Middle East peace talks; the Palestinians say they will not return to the negotiating table without a complete halt to construction.
During the press conference, Netanyahu said the "far-reaching and painful" move would not be implemented in predominantly Arab East Jerusalem, which is viewed by Israel as a separate issue to be discussed in a final status agreement with the Palestinians.
"We do not put any restrictions on building in our sovereign capital," the premier said.
The freeze applies only to new construction, meaning housing already underway will continue. Also, Netanyahu said, only new homes are included.
"We will not halt existing construction and we will continue to build synagogues, schools, kindergartens and public buildings essential for normal life in the settlements," he said.
Netanyahu concluded with an appeal to the Palestinians to enter into a new round of peace talks.
"Now is the time to begin negotiations, now is the time to move forward towards peace," he said. "Israel today has taken a far-reaching step toward peace, it is time for the Palestinians to do the same."
He added: "Israel's government has made an important step toward peace today, let us make peace together."
Netanyahu: Settlement freeze will prove Israel really wants peace
At the cabinet vote, National Infrastructure Minister Uzi Landau (Yisrael Beiteinu) was the only minister to oppose the move.
Shortly before the cabinet session, Netanyahu said the freeze would prove that Israel genuinely seeks to reach peace with the Palestinians.
"In the international circumstances that have been created, this step will advance Israel's broad international interests. This is not a simple step, nor an easy one; but it has many more advantages than disadvantages," Netanyahu told his aides.
He added: "It will enable us to show the world this simple truth: The Government of Israel wants to enter into negotiations with the Palestinians, is taking practical steps to enter into negotiations and is very serious in its intention to advance peace."
At least one key Security Cabinet member, Defense Minister Ehud Barak, came out in favor of the proposal. "Its aim is to open a window for renewing negotiations with the Palestinians," he said.
"I hope that the Yesha [council of settlements] leadership, which is patriotic, responsible and serious, will understand the need for the decision at this time," Barak added.
"The understandings with the United States are of the utmost importance with regard to negotiations, and guarantees of security and its military supremacy."
An official statement from the Prime Minister's Office on Wednesday said Netanyahu would seek approval for the moratorium from his cabinet in order to boost peace prospects.
"As part of our efforts to give impetus to peace talks with the Palestinian Authority and promote Israel's comprehensive national interests, the prime minister will ask the security cabinet to approve a temporary suspension on construction permits for new residences and the [actual] start of new residential construction for a period of ten months," the statement said.
The move is not unexpected; Netanyahu announced several days ago that he intended to declare a settlement freeze for 10 months. Israel began building in the West Bank in 1967, following the capture of the territory from Jordan during the Six-Day War. Today, more than a quarter of million Israelis live in West Bank settlements.
The freeze will also not apply to construction that has already been authorized or to work on public buildings conducive to normal life in the territories.
The prime minister of Israel, Binyamin Netanyahu, told a news conference earlier today that there will be a ten-month stop in the construction of new  settlement housing in the West Bank. The Israeli cabinet approved the move by a margin of eleven to one.

File photo of Israeli Prime Minister Binyamin Netanyahu."We have been told by our friends that once Israel takes the first meaningful steps towards peace, the Arab world and the Palestinians will follow," said Netanyahu following the cabinet's endorsement of the move. "Well, the government of Israel has taken a very big step towards peace today, and I hope the Palestinian and the Arab world will work with us to forge a new beginning for our children and theirs."

The freeze was made "out of broad national interests with the aim of encouraging negotiations with our Palestinian neighbours," he continued. "When the period of freeze ends my government will return to the previous policy of building in Judea and Samaria the Jewish name for the West Bank."

"This is a far-reaching and painful step ... We hope that this decision will help launch meaningful negotiations to reach an historic peace agreement that will finally end the conflict between Israel and the Palestinians," Netanyahu later said.

Under the plan, construction permits for new residential buildings would be put on hold for ten months.  The government said that "natural growth" — characterised by the construction of homes by young people, who were raised in the settlements and want to build houses for their own families — would be exempt from the freeze. Parts of the West Bank that Israel annexed to the Jerusalem municipality would also be excluded from the freeze. The building of schools and places of worship, which will enable settlers to live what Netanyahu described as "normal lives", will also continue.

"We will not halt existing construction and we will continue to build synagogues, schools, kindergartens and public buildings essential for normal life in the settlements," he commented.

The prime minister added that there would be no change to Israel's existing policy on the issue of Jerusalem. "Regarding Jerusalem, our sovereign capital, our position is well-known.  We do not put any restrictions on building in our sovereign capital," he said.

Several members of the Israeli cabinet expressed their disapproval at the proposal, with the conservative, ultra-Orthodox Shas party boycotting the cabinet meetings.

"I think it's a complete crumbling of Netanyahu's position and is contrary to all of his electoral promises. He promised an end to unilateral steps, and here we see him after only a few months in office giving up, even though there is no reciprocity from the Palestinians," said the head of the main settler lobby, Danny Dayan, to the Christian Science Monitor. We are 300,000 citizens, living in 150 communities. It is impossible to freeze us. I don't how it will happen, but we will break this freeze."

Many Palestinians also criticised the proposal, mainly because East Jerusalem was not included in the settlement freeze. Nabil Abu Rudeineh, a Palestinian spokesman, said to the Wafa news agency that Palestine “rejects returning to peace talks without the complete cessation of settlement activities in the West Bank and Jerusalem.”

Palestinian prime minister Salam Fayyad also rejected the plan. "The exclusion of east Jerusalem is a very, very serious problem for us. We are not looking for the resumption of the process just for the sake of it, for it to falter a week or two down the road,"

Israel captured East Jerusalem from Jordanian control, following Israel's victory in the 1967 Arab-Israeli War. The Jewish state annexed that part of the city in a move that was not recognized by the international community.

Earlier this week, on a visit to Argentina, Palestinian President Mahmoud Abbas stepped up his campaign to put international pressure on Israel to stop building on lands that Palestinians say are their own. Abbas urged US president Barack Obama, as well as leaders of other nations that support Israel, to press the Jewish state to end its construction of settlements on occupied lands.

Netanyahu has in the past offered to restrain settlement growth, but today's announcement was the first time that he set a clear timeframe.