* Netanyahu's office declines comment on reported curbs
* U.S. engaged in fresh drive to resume peace talks
* Peace Now group sees slowdown in new building approvals
Prime Minister Benjamin Netanyahu has quietly curbed new building projects in Jewish settlements, an Israeli watchdog group and media reports said on Tuesday, in an apparent bid to help U.S. efforts to revive peace talks with the Palestinians.
"We see there are fewer approvals for new construction in the West Bank since President Barack Obama visited (in March)," Yariv Oppenheimer, head of Peace Now, which monitors settlement activity in the occupied West Bank and East Jerusalem, told Reuters. He said it was too early to give any numbers.
Israeli Army Radio reported that Netanyahu had met Housing Minister Uri Ariel to order a freeze in issuing tenders for new housing projects in settlements in the West Bank, effectively delaying construction of hundreds of homes.
The Haaretz newspaper, quoting unidentified senior officials, said Netanyahu had promised U.S. Secretary of State John Kerry that he would refrain until mid-June from publishing new tenders in the West Bank and East Jerusalem, areas that Israel captured in the 1967 Middle East war.
In Jerusalem, a spokesman for Netanyahu, who is visiting China, had no immediate comment. Kerry is engaged in a fresh U.S. diplomatic campaign to revive peace talks, which collapsed in 2010 over Israel's continued expansion of settlements.
Ariel, interviewed on Army Radio, declined to confirm or deny that a freeze was in place.
"I am not commenting. A minister sits with his prime minister. If they want to go public, they have ways to go public. If they want for it stay between them, it will stay between them," Ariel said.
"UNDERSTAND WHAT YOU WANT"
Ariel was pressed to say whether he was unhappy with the freeze order. "You can understand whatever you want," he replied.
Ariel is a member of the far-right Jewish Home party, whose leader, Naftali Bennett, has advocated annexing parts of the West Bank.
The Palestinians, who demand a halt to settlement activity as a condition for returning to peace negotiations, want to establish a functioning state in the West Bank and Gaza Strip, with East Jerusalem as its capital.
In an apparent effort to give U.S. diplomacy a chance, the Palestinians have not applied in recent months to join any world organisations after the de facto recognition of Palestinian statehood at the United Nations last November.
After the U.N. vote, which was opposed by Israel and the United States, Netanyahu decided to build 3,000 more settler homes in the West Bank and East Jerusalem.
But during his visit to Israel and the West Bank, Obama reiterated U.S. displeasure, saying that continued settlement activity was "counterproductive to the cause of peace".
A 10-month moratorium on housing starts in settlements in 2009 led to a brief resumption of peace talks. Netanyahu says the Palestinians should now return to negotiations unconditionally, a position echoed by Washington.
The settlements that Israel has built in the West Bank and East Jerusalem are considered illegal by most countries. Israel cites historical and biblical links to the two areas, where about 500,000 Israelis and 2.5 million Palestinians now live.