Israel's top negotiator Tzipi Livni told the Palestinians earlier that the release of 26 prisoners could not take place because of an attempt by the government of president Mahmud Abbas to seek international recognition, a source said.
"The decision by the Israelis to delay the release of the fourth tranche of prisoners creates challenges," said White House spokesman Jay Carney.
"There certainly is currently no agreement on the release of this tranche."
Carney said, however, that Secretary of State John Kerry and the US negotiating team would not be deterred in trying to keep the peace effort alive despite recent setbacks.
"Neither side has indicated that they want to walk away from the talks. They both indicated they want to find a way to move forward."
Israel refused to release the prisoners until the Palestinians agreed to push on with peace talks past an end-of-April deadline. But the Palestinians would not give the undertaking until the previously agreed releases took place.
In response to Israel's move, the Palestinians applied to join several international treaties and organizations in the belief that aspirations for statehood through peace talks were foundering.
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