A top Palestinian official said on Sunday that there had been no breakthrough in marathon American-led efforts to revive direct peace talks, but US Secretary of State John Kerry said there had been "real progress."
The statements come just as Israel announced that it might implement monetary incentives to encourage people to move to an illegal settlement in the West Bank.
"It was a positive and profound meeting with [Palestinian] President (Mahmoud)Abbas but there has been no breakthrough so far and there is still a gap between the Palestinian and Israeli positions," chief Palestinian negotiator Saeb Erakat told reporters after Kerry finished talks in Ramallah with Abbas, his third meeting in as many days.
But Kerry, however, insisted he had held "very positive" discussions with both sides since starting his intense shuttle diplomacy  in Jerusalem on Thursday evening, in a high-profile bid to draw the two sides back into direct negotiations after a gap of nearly three years.
And he said that with "a little more work" the start of final status talks "could be within reach."
"I am pleased to tell you that we have made real progress on this trip and I believe that with a little more work, the start of final status negotiations could be within reach," Kerry told reporters at Ben Gurion airport just before leaving for Brunei.
"We started out with very wide gaps and we have narrowed those considerably," he said, describing them as "very narrow."
"We have some specific details and work to pursue but I am absolutely confident that we are on the right track and that all the parties are working in very good faith in order to get to the right place."
Asked if Israel's settlement building had hampered efforts to achieve a breakthrough, he said: "The answer is no, there are any number of obstacles, but we are working through them.”
"We have to have the courage to stay at this and to make some tough decisions," he said.
Kerry, who has over the last four days spent a total 13 hours in talks with Israeli Prime Minister Benjamin Netanyahu and another six with Abbas, said he would return to the region without saying when.
"I'm going to come back because both leaders have asked me to," he said.
Speaking at the start of the weekly cabinet meeting, Netanyahu insisted that Israel was not blocking a return to negotiations.
"We are not putting up any impediments on the resumption of the permanent talks for a peace agreement between us and the Palestinians," he said in remarks communicated by his office.
He also pledged to put any agreement to a referendum, saying it will be "submitted to the people for a decision."
But Israel's army radio said Kerry's marathon efforts had so far failed to coax the sides back into direct negotiations after a gap of nearly three years.
Abbas is pushing Israel to free the longest-serving Palestinian prisoners, to remove roadblocks in the West Bank and to publicly agree to make the lines that existed before the 1967 Middle East war the baseline for negotiations.
Army radio said that Netanyahu was willing to consider just the first two conditions -- but only after talks were under way.
So far, Israel has flatly refused to countenance any return to the 1967 lines.
Palestinian officials appeared pessimistic about Kerry's chances of achieving a breakthrough.
"Netanyahu and his government are not serious about establishing a Palestinian state in the 1967 borders, they speak of a state without clear borders, and we need clarity according to international resolutions," said Azzam al-Ahmad, a senior official of Abbas's ruling Fatah party.
"We are ready to resume negotiations according to our clear guidelines," he told Voice of Palestine.
"Even with regards to the prisoners' issue, Israel did not provide any clear answer. We want a serious process to be launched," he said.
In another move likely to spark tension, army radio said an Israeli committee was poised to push through a big discount for buyers of nearly 1,000 new homes which are due to be built in annexed east Jerusalem. 
The plan, which will offer prospective buyers a huge discount on 930 new homes to be built in Har Homa, will be discussed by Jerusalem municipality's finance committee on Monday, army radio and Maarivnewspaper reported.
If approved, the plan will lower the price of each new home by $27,500 in a move which will be funded by the housing ministry.
Har Homa is located on east Jerusalem's southern outskirts, and construction there is likely to have a serious impact on the sector's boundary with the rest of the West Bank, analysts say.
Jerusalem councilor Elisha Peleg, a member of Netanyahu's right-wing Likud party, made no effort to hide his delight.
"The temporary suspension of construction in east Jerusalem is over, despite the visit of Secretary of State Kerry," he told army radio.
"There is no reason to halt construction any more, because it is now proved that stopping construction in east Jerusalem has not brought about a renewal of negotiations with the Palestinians but has caused a severe shortage of housing," he said.
Last week, on the eve of Kerry's arrival, another local committee gave final approval to build some 70 homes in the same area. 
Palestinian chief negotiator Saeb Erakat said it showed which side was blocking a return to the negotiating table.
"This is Netanyahu's response to everything Kerry said, to his ideas and to all his efforts," Erakat told AFP.
"We on the Palestinian side tried every possible effort to help Kerry succeed but it is obvious today ... that Netanyahu is putting an obstacle in front of Secretary Kerry's efforts."
"Netanyahu alone is responsible for ruining Kerry's efforts and trying to abort his mission and destroying the two-state solution which is supported by the entire international community."
Palestinians have said they will not return to direct talks unless Israel completely halts settlement construction and accepts the 1967 lines as the basis for negotiations.
Although Israel has expressed a willingness to talk, it has insisted it would only do so if there were no such "preconditions".
Kerry, who has made the elusive goal of Middle East peace a top priority, was on his fifth visit to the region since taking over the State Department in February.
"Kerry is willing to put in the legwork necessary to move this process forward in a meaningful way," a US official said on condition of anonymity.
US officials have been tight-lipped about the substance of Kerry's meetings, fearing that any public statements could put at risk his efforts.