Israeli Prime Minister Benjamin Netanyahu has banned settler housing tenders being issued for the West Bank and east Jerusalem when US President Barack Obama visits this month, a daily said Friday.

Netanyahu had told officials the "suspension" did not amount to a freeze in settlement construction, and that it would only be in place up until the end of Obama's trip to avoid "embarrassing" leaders, Maariv newspaper reported.

In March 2010, Israel sparked the ire of the US administration by announcing, during a visit by Vice President Joe Biden, that 1,600 new homes would be built in the east Jerusalem quarter of Ramat Shlomo.

"According to instructions provided by the prime minister's office to the appropriate officials in the ministries of defence and housing, no new tenders for housing will be issued for these areas in the coming weeks," said Maariv.

"Similarly, projects whose planning has been completed will not be carried out, and all other bureaucratic steps involved in the public tenders will be postponed," it added.

"In telephone conversations which Netanyahu held with officials, it was emphasised that there was no (construction) freeze, but rather a suspension whose purpose is not to embarrass the political establishment during the president's visit."

Netanyahu's office had no immediate comment on the Maariv report.

Obama is to meet Israeli and Palestinian leaders in Jerusalem and Ramallah during his visit on March 20-22, his first as president.

The White House says Obama has no plans to use the trip to push new proposals to break the more than two-year deadlock in Palestinian-Israeli peace talks.

Palestinian president Mahmud Abbas wants to renew peace talks in tandem with a freeze on Jewish settlement construction with the aim of securing a state along the lines which existed before the 1967 Six-Day War.

Netanyahu has called for a return to direct talks -- but without preconditions.

In February last year, Israeli media reported that Netanyahu had ordered a pause in the construction of new homes in mainly-Arab east Jerusalem to avoid conflict during a visit to the White House.