The United States offered Israel a package of incentives last month in a bid to sway Tel Aviv to halt a contentious development project in the West Bank for 90 days.

The package included the supply of another 20 radar-evading Joint Strike Fighter jets, estimated at $3 billion. It also included diplomatic promises of blocking any initiative at the U.N. Security Council critical of Israel and the signing of a comprehensive security agreement with Israel.

Israel had already purchase a first tranche of F-35 last August.

Last week, though, Washington conceded that its efforts to salvage the peace process had failed, effectively scrapping the package that had been offered to Israel and dashing any prospect of direct negotiations between Israel and the Palestinians.

Israel's August purchase made the country the first buyer outside the aircraft's nine-nation group of developers. And even ahead of the building freeze proposal, Israel was eyeing more stealth fighters.

"We ordered 20 F-35s, then, during the talks about freeze, the Americans put 20 additional planes on the table," a senior Israeli official said, adding that Tel Aviv is not willing to pay for the additional 20 jets and is "trying to find another arrangement."

"It was discussed during the summer when the United States was talking about the $60 billion weapons deal with Saudi Arabia, in the context of the American policy of maintaining Israel's qualitative military edge. But nothing was settled. We will continue to discuss it," he added. Israel's acquisition of F-35 aircraft, made by Lockheed Martin, affords Israel access to stealth technology that provides the Jewish state with air superiority over hostile enemy anti-aircraft defenses.

Last week a senior adviser to Israeli Prime Minister Binyamin Netanyahu told the country's public radio that the government had not ruled out the possibility that Israel would not receive the F-35 combat planes, although the development freeze did not materialize.

The Palestinians have long argued that the continuation of Jewish settlements on the occupied territories of the West Bank would lessen the likelihood of the establishment of a Palestinian state in the West Bank and Gaza Strip.

Critics have sniped at Israel's move to reject the U.S. proposal.

"It wasn't such a great deal from the U.S. perspective, either, because it would only buy a three-month extension at $30 million a day with no guarantee the two parties wouldn't be back at square one at the end of it," The Washington Times wrote.

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