The US administration has warned against an Israeli government announcement it could continue to demolish buildings in East Jerusalem.
An unnamed Obama administration official told Israeli media the US "calls on both sides to avoid inflammatory actions in Jerusalem".
On Wednesday an Israeli minister said the demolition of illegally built homes of Arabs could continue.
Last week indirect talks began between Israelis and Palestinians.
The US State Department official was quoted as saying that they hoped the indirect negotiations, known as "proximity talks", would lead to direct negotiations between the parties and steps that would "resolve this issue once and for all".
"If either side takes significant actions during the proximity talks that we judge would seriously undermine trust, we will respond and hold them accountable and ensure negotiations will continue," the official said.