The Israelis complain that the focus on settlements is out of proportion and the issue should be resolved during peace talks, not before. They have pledged not to establish any new settlements and note that the United States for years tolerated "natural growth" of settlements, even though the "road map" peace plan presented by the U.S. in 2003 prohibited it.
Israeli officials say Obama is pressing for a freeze to enhance his credibility in the Arab world, but they say they can't legally restrict growth in places such as Maale Adumim, which many expect will remain part of Israel under any deal.
U.S. and Israeli officials are expected to resume negotiations on the issue today.
The standoff has been an unwelcome distraction for Prime Minister Benjamin Netanyahu's new government. Though polls show Israelis are split on the issue of a freeze, he took office as part of a coalition that vowed to keep building. Settlers, who now number nearly 500,000 in the West Bank and East Jerusalem, are pressing him to keep his word.
Palestinians say there is no point to talks as long as the settlements continue to grow and Israelis further entrench themselves on disputed land.
"Natural growth in an illegal settlement doesn't make it legal," said Palestinian lawmaker Mustafa Barghouti. "Any continuation of settlement growth is going to end the two-state solution."
Some experts agree that the Israeli government has been using the "natural growth" argument to expand settlements. The communities' populations grew by about 7% last year, compared with Israel's average growth rate of about 1.8%, according to Mossi Raz, an Israeli activist opposed to settlement growth.
Much of that growth is coming from people moving into the settlements, rather than from new births or grown children starting their own families. In Maale Adumim, about half the growth in recent years has come from migration, according to Peace Now, an Israeli advocacy group that the opposes settlements.
"So most of the growth is not so natural," Raz said, adding that Israeli home buyers should look elsewhere.
"Every person who goes there today," he said, "is going to be our problem tomorrow."