The FINANCIAL -- TEL AVIV. U.S. Middle East envoy George Mitchell has postponed his visit to the turbulent region due to straining ties between the United States and Israel over plans for new settlement construction in the Palestinian territories, an Israeli presidential spokesman said on March 16.

Mitchell was to start his Middle East tour aimed at easing growing tensions in the region in Israel on March 16.

"We received a call from the U.S. embassy in the morning and were told Mitchell would not come to Israel today," the spokesman said.

Palestinian authorities recently agreed to hold indirect talks with Israel mediated by the United States after a 15-month break, but peace hopes were thwarted after the Israeli government announced last week plans to build 1,600 new housing units in East Jerusalem, which has prompted strains in U.S.-Israeli relations.

The U.S. has demanded Israel scrap construction plans, described by the Obama administration as an "insult" that had "undermined this very fragile effort to bring peace to that region."

Israeli Prime Minister Benjamin Netanyahu said on Monday Israel would not suspend building in East Jerusalem despite the U.S.'s fierce reaction.

Israel's announcement drew cutting criticism from many other countries and international bodies, including the United Nations, the European Union and Russia, who comprise the Quartet of international mediators in Israeli-Palestinian peace talks. The Quartet will convene in MOSCOW on March 19.

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