The United Arab Emirates told the UN Security Council that it will not call a vote on Monday on a draft resolution demanding Israel "immediately and completely cease all settlement activities in the occupied Palestinian territory," according to a note seen by Reuters.
The UAE told council counterparts in the note sent on Sunday that it will now work on drafting a formal statement - known as a presidential statement (PRST) - which the 15-member council has to agree by consensus.
"Given the positive talks between the parties, we are now working on a draft PRST which would garner consensus," the note said. "Accordingly, there will not be a vote on the draft resolution on Monday. Much of the language of the PRST will be drawn from the draft resolution."
The United States on Thursday voiced deep dismay at Israel's decision to expand Jewish settlements in territories disputed by the Palestinians and also described as "unhelpful" a push for the UN Security Council to denounce the move.
The United Arab Emirates had on Wednesday circulated the text of a resolution to the Security Council that it had drafted in coordination with the Palestinians.
The move came after Prime Minister Benjamin Netanyahu's government authorized nine Jewish settler outposts in the West Bank and announced mass construction of new homes in established settlements a week ago.
The United States traditionally shields its ally Israel at the United Nations. But in 2016 President Barack Obama's administration abstained on a vote to allow the council to adopt a resolution demanding Israel stop building settlements.
Most world powers view as illegal the settlements Israel has built on land it captured in a 1967 war with Arab powers. Israel disputes that and cites biblical, historical and political links to the West Bank, as well as security interests.
After the Israeli government's announcement last week, U.S. Secretary of State Antony Blinken said he was "deeply troubled."
The draft council resolution put forward by the UAE would have reaffirmed "that the establishment by Israel of settlements in the Palestinian territory occupied since 1967, including East Jerusalem, has no legal validity and constitutes a flagrant violation under international law."
It also condemned all attempts at annexation, including decisions and measures by Israel regarding settlements.