The U.S. has been pushing for Israel to give up an additional 13 percent of the West Bank to the Palestinians. Netanyahu Wednesday rejected any U.S. "dictates" on the size of an Israeli pullback.
Secretary of State Madeleine Albright says if Israel accepts the American proposals, President Clinton would preside over a new round of talks Monday.
Netanyahu has convened his nine-member inner Cabinet to discuss the U.S. proposal. The full 17-member Cabinet is expected to make a final decision Sunday.
Netanyahu says a pullback would threaten Israel's security. The plan calls for an Israeli troop withdrawal from an additional 13 percent of the West Bank beyond the 27 percent already handed over.
On Tuesday, an exasperated Albright had set a deadline Tuesday for Netanyahu to accept Washington's Mideast peace proposal.
Over the next six days, it will be up to the U.S. special Mideast envoy, Dennis Ross, and Netanyahu aides Danny Naveh and Yitzhak Molcho, to try and resolve the differences.
It was not clear how Albright expected mid-level negotiators to succeed where she had failed, especially with Netanyahu adamant that Israel could not accept the American withdrawal proposal.
"The difficulty arises from a very simple point. We cannot compromise on Israeli security," Netanyahu told reporters before returning to Israel. "We have not resolved the territorial issue of the further redeployment."
Israel's best offer has been a withdrawal from 9 percent of the West Bank, provided the Palestinians make a better effort to combat Islamic militants who have carried out more than a dozen suicide bombings in Israel since 1994. Israeli officials have said Netanyahu might raise his offer to 11 percent.
At a news conference Tuesday, Albright was careful to interlace her tough remarks with compliments to Netanyahu, saying he was "creative and helpful" in the negotiations and that some progress had been made.
However, she made it clear that "the invitation to the Washington meeting is on the basis of those [American] ideas, and watering them down is not in the works."