Mr Netanyahu has refused US demands for a freeze on settlement construction
Israel's foreign ministry has recalled one of its senior diplomats after he criticised his government for harming ties with the United States.
Nadav Tamir, consul-general in Boston, will travel to Jerusalem next week to give "clarification" to the ministry.
In an internal memo, Mr Tamir wrote that public clashes with Washington over settlement construction were "causing strategic damage to Israel".
The government said he had violated protocol by expressing political views.
The three-page document, entitled "Sad thoughts on Israel-US relations", was leaked to Israel's Channel 10 TV.
"The way in which we are conducting the relationship with the US government is causing Israel strategic damage. The distance created between us and the Obama administration has clear implications on Israeli deterrence," Mr Tamir wrote.
Israeli Prime Minister Benjamin Netanyahu has rejected President Barack Obama's demand for a freeze on settlement construction, saying their "natural growth" had to be allowed.
All settlements are illegal under international law, though Israel disputes this. More than 450,000 Israelis live in the occupied West Bank, including East Jerusalem.
Mr Tamir said in his memo that narrow political considerations were contributing to the deterioration of bilateral ties.
"There are people in US and Israeli politics who ideologically oppose Obama, and are willing to sacrifice the special relationship between the two countries in order to advance their political agenda."
The "atmosphere of confrontation", he warned, was alienating the US public and putting the Jewish community in a difficult position.
"Many of them are distancing themselves from the state of Israel because of this conflict," he wrote.
Israeli Foreign Minister Avigdor Lieberman has reportedly demanded to know how Mr Tamir's letter was leaked to the media.