Israel's ties with the United States are at their worst in 35 years, the country's top envoy to the United States was quoted as saying Monday.
Michael Oren, Israel's ambassador to the United States, made the remarks in a conference call to the country's consuls general Saturday night, Israel's Haaretz newspaper reported.
His comments came as the United States harshly criticized Israel for announcing new settlement construction in disputed East Jerusalem territory while Vice President Joe Biden was visiting the country.
Israeli Prime Minister Benjamin Netanyahu has set up a team to investigate the timing of the announcement, which U.S. Secretary of State Hillary Clinton called "insulting" to her country.
The United States has asked Israel to "do something significant" to show that it is serious about moving toward negotiations with Palestinians, a U.S. official and an Israeli official told CNN. Specifically, the United States asked Israel to rescind the decision on the settlement project in East Jerusalem, the sources said.
State Department Deputy Secretary James Steinberg delivered that message Friday in a meeting with Oren, and Clinton reiterated it in a phone call with Netanyahu, the sources said.
"It's not about words any more," said the U.S. official, who could not speak on the record because of the sensitive nature of the diplomacy. "We need to see some concrete steps."
Earlier, Netanyahu spokesman Mark Regev said he could not confirm whether Clinton presented Israel with a set of demands.
Netanyahu was focused on trying to "calm things down," Regev said.
Speaking Monday during an event at the Knesset, the Israeli parliament, Netanyahu argued that such construction has been going on for decades and does not hurt Arabs.
"In the last 42 years, there has not been a government that has limited the building in Jerusalem," he said, citing several suburbs of the city. "The development of these Jewish neighborhoods never hurt in any way the Arabs in East Jerusalem and did not come on account of them."
He added there is broad agreement such neighborhoods will remain part of Israel in a final peace agreement. "We will continue to keep Jerusalem as an open city for all the religions," Netanyahu said," a city where Jews and Arabs, Christians and Muslims live in coexistence, enjoy freedom to worship at their holy sites."
The Israeli announcement of construction in Ramat Shlomo came during Biden's visit last week. It complicated U.S. efforts to set up so-called proximity talks between the Israelis and Palestinians, the latest attempt to nudge the two sides back toward talking directly.
Biden condemned the decision, calling it "a step that undermines the trust we need right now."
–CNN's Kevin Flower contributed to this report.