"While we don't believe the existence of settlements is an impediment to peace, the construction of new settlements or the expansion of existing settlements beyond their current borders may not be helpful in achieving that goal," White House Press Secretary Sean Spicer said.
This is a departure from Trump's previous support for settlement building by the Jewish state. The US President had vowed to forge closer ties with Israel and move away from the Obama administration's policy towards the country.
The White House also said it had not yet taken a position on settlement activity by Israel, and would raise the issue with Netanyahu during his visit later this month.
"The Trump administration has not taken an official position on settlement activity and looks forward to continuing discussions, including with Prime Minister Netanyahu when he visits President Trump later this month," the statement said.
The Press Secretary said American desire for peace between the Israelis and the Palestinians has remained unchanged for 50 years.
Before taking office, Trump had lashed out at the Obama administration's decision to withhold a veto on a United Nations Security Council resolution criticising Israel's settlements, an indication that he would be more supportive of the Jewish state.
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