Israel and the US are moving toward a compromise solution on the settlement issue that might allow both sides to claim "victory," The Jerusalem Post has learned. According to senior government officials, under this type of solution, Israel would declare a moratorium of a few months on the settlement issue, possibly half a year, while the US would give Israel a green light to complete a still-to-be-determined number of housing units in the settlements that are in advanced stages of construction. Officials in the Prime Minister's Office would not confirm media reports that work on some 2,500 housing units in the settlements would continue. Under this type of arrangement, US President Barack Obama would be able to claim a victory in getting Israel to agree to a moratorium on any new housing starts in the settlements, while Prime Minister Binyamin Netanyahu could claim that he did not agree to a complete freeze, and that housing construction would continue. In addition, US Mideast envoy George Mitchell would continue efforts to extract normalization gestures from at least some countries in the Arab world. A State Department spokesman on Wednesday night denied the media reports on the 2,500 housing units. Israeli officials said that Obama was continuing pushing hard on the settlement issue because of a feeling he needed some breakthrough here to be able to go to the Arab world and build coalitions to help the US deal with mounting problems in Iraq, Afghanistan and Iran. Once agreement is reached on the settlement issue, and the US gets some gestures from the Arab world, the next step would possibly be an event - likely an international conference - where a "to do" list would be presented regarding what needed to be done to move the diplomatic process forward. This "to do" list, according to one well-placed source, was shaping up as a revamped edition of the road map, with sequential phases and a stronger regional component, meaning that the Arab states would be asked to become involved in the normalization of ties in the early stages, rather than at the end, of the process. In addition, any new road map would have take into consideration - and deal with in detail - something that did not exist when the original road map was launched in 2003: Hamas control of the Gaza Strip. Diplomatic sources said that the US, interested in shoring up its relations with Russia, is now much more amenable than in the past to the idea of an international conference in Moscow to launch the new initiative. The sources said the issue was discussed during Obama's recent visit to Moscow, and that it will also be raised at the G8 meeting that opened Wednesday in Italy. According to National Security Adviser Uzi Arad, speaking at a Knesset press conference marking Netanyahu's 100th day in office, Netanyahu expects Obama to honor the agreements reached with the Bush administration on West Bank construction, Arad revealed that ahead of Netanyahu's meeting with Obama in May, the National Security Council prepared reports that articulated the American commitments in great detail. Netanyahu also quizzed his predecessor, Ehud Olmert, in a meeting on Friday about the agreements he had reached with president George W. Bush behind the scenes. "The problem is that Americans saw the situation from a different perspective than we did and it required convergence that we are working on now," Arad said in response to a question from The Jerusalem Post. "The US didn't see itself obligated by the agreements. Our demand to respect previous standpoints has necessitated the dialogue with the US continuing to this very day. Israel expects agreements to be honored." Arad said the policy review period that the Netanyahu and Obama administrations embarked on when the two new leaders took over did not end when they met in Washington and would continue until a framework is agreed on how to proceed on the diplomatic front. Netanyahu's policy planning director Ron Dermer vowed at the press conference that no compromises would be made on Israel's insistence that a Palestinian state be demilitarized. He promised that the prime minister would never utter the words "Palestinian state" without the word "demilitarized" preceding them. When asked why Netanyahu waited to say those words in an address at Bar-Ilan University rather than already uttering them in Washington, Dermer said that Netanyahu purposely did so in order to emphasize his conditions for a Palestinian state before committing himself to establishing it. Channel 2 reported Wednesday night that the prime minister had told his father, 100-year-old historian Benzion Netanyahu, that he purposely set the conditions knowing that the Palestinians would never agree to them. "He doesn't support [a Palestinian state]," the father said in a phone interview. "He set conditions that they won't ever accept. That's what he told me. He set the conditions and they won't accept even one of them." Netanyahu's office responded by accusing Channel 2 of "maliciously tricking a 100-year-old man." Kadima released a statement saying that the interview proved that Netanyahu did not endorse a Palestinian state in good faith.