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A senior diplomatic official called the cancellation of US Secretary of State Condoleezza Rice's Israel visit unprecedented, Israel Radio reported on Tuesday.
According to the official, Washington's decision could be interpreted in the region as meaning that the US believed the peace process could not move forward due to the situation in Israel.
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However, Dov Weisglass, who served as an adviser to former prime minister Ariel Sharon, told Army Radio on Tuesday morning that Rice's decision to cancel her trip may have been connected to situation in the PA, not necessarily the Israeli government alone.
Weisglass noted that with the current anarchy in the Gaza Strip and West Bank due to the infighting between the Fatah and Hamas factions, it would be difficult to determine which officials to hold talks with.
Israel Radio also reported Tuesday that Foreign Minister Tzipi Livni spoke Monday night with Rice, although the government had not received an official report of the conversation.
Senior officials at Livni's office said that Rice's cancellation had no connection whatsoever to the talk they held.
Meanwhile, sources in Jerusalem expressed surprise over the cancellation, the report said, since meetings with the US Embassy had taken place just the day before in preparation for Rice's visit.
The Foreign Ministry confirmed late Monday night that Rice had cancelled her trip to Israel planned for next week due to the unstable political situation in Israel.
Rice was scheduled to meet with Israeli and Palestinian leaders following a stop-off in Moscow.
US State Department spokesman Sean McCormack said Monday that the cancellation would not get in the way of US efforts to move forward with Israeli-Palestinian peace talks.
"It's a change in plans, yes," McCormack admitted, but added that the US would "continue efforts to advance the Israeli-Palestinian track."
"The political situation in Israel has become a bit more complex in the near term," said McCormack.
Tension has risen between government officials following the release of the Winograd's interim report into the Second Lebanon War. Many government officials have called on Prime Minister Ehud Olmert to step down.
On Thursday, 150,000 people participated in a mass demonstration at Tel Aviv's Rabin Square in an attempt to get Olmert and his government to resign.