Decision on Jerusalem made under intense pressure from U.S., 'satisfies' Palestinians

Prime Minister Benjamin Netanyahu agreed to quietly halt all Jewish construction in eastern Jerusalem as a "confidence-building gesture" toward the Palestinian Authority as demanded by the Obama administration

The official said the agreement, brokered last week by George Mitchell, Obama's envoy to the Middle East, satisfies the PA's precondition for beginning direct negotiations with Israel aimed at creating a Palestinian state.

The official also said Mitchell extracted a pledge from Netanyahu that he will extend a 10-month halt to all Jewish construction in the West Bank that he implemented in November, also as a so-called confidence building gesture to the PA demanded by the Obama administration.