US President George W Bush has told Israeli Prime Minister Ariel Sharon not to expand Jewish settlements in the West Bank.
Mr Sharon is seeking support for the Gaza withdrawal
He warned Israel against "any activity that contravenes the roadmap or prejudices final status obligations".
Mr Sharon said Israel would meet its commitments under the international peace plan, known as the roadmap.
The issue overshadowed talks in Texas that were designed to show US support for Mr Sharon's Gaza pullout plan.
Mr Bush praised Mr Sharon's "courageous initiative" to pull all Jewish settlers from the Gaza Strip and parts of the West Bank, but he also raised concerns about Israel's recent decision to expand settlements around Jerusalem.
Israel has unveiled plans for 3,500 extra homes on occupied land near Maale Adumim - the largest Israeli settlement in the West Bank - forming a corridor to Jerusalem.
Mr Bush said the move was a clear breach of the terms of the roadmap.
Speaking to reporters after their meeting, Mr Bush said he would continue to work with Israel to remind the Israelis of their obligations.
However, he did not specify what action, if any, might be taken against Israel if it continued to build.
Mr Sharon said Israel would "meet all its obligations under the roadmap", but he said Israel could not move ahead with talks until the Palestinians ensure "a full cessation of terror".
Mr Sharon said Maale Adumim "would be part of Israel" and that there ought to be "contiguity between Maale Adumim and Jerusalem."
The international community considers all settlements in Gaza and the West Bank, including East Jerusalem, as illegal under international law, though Israel disputes this.
The meeting in Crawford, Texas, followed the first deadly incident in Gaza since Mr Sharon and Palestinian leader Mahmoud Abbas called for an end to violence at a summit in Egypt in February.
Palestinian militants fired dozens of rockets and mortars at settlements, after three youths were killed in disputed circumstances in the southern Gaza town of Rafah on Saturday.
Witnesses say they were killed trying to retrieve a football near a military position on the Egypt border; Israel says they were involved in smuggling weapons.
Correspondents say Mr Sharon's trip to Texas was intended as a reward for Mr Sharon's Gaza plan.
Mr Sharon is planning to pull all 8,000 Jewish settlers, and the Israeli troops who protect them, from Gaza this summer. Israel will keep control of the borders, coast and airspace of the occupied territory, which is home to 1.5 million Palestinians.
Four isolated settlements in the Israeli-occupied West Bank will also be evacuated.