The Obama administration has called for a total freeze on Israeli settlements in the occupied West Bank and East Jerusalem, which the PA has designated as the capital of any future Palestinian state.
Netanyahu has only offered a moratorium on the building of new settlements – meaning that settlement projects that have already received permits from the Israeli government will go ahead regardless.
Settlement stance
Hours before the talks between Obama and Netanyahu, which are scheduled for 7pm on Monday (01:00 GMT on Tuesday), the White House press spokesman said that the US remained opposed to Israeli settlements, which are illegal under international law.
"The policy of the United States government for many decades has been: no more settlements, that's not something that is new [with] this administration," Robert Gibbs said.
The meeting between Obama and Netanyahu was only announced by White House late on Sunday after the Israeli prime minister had landed in Washington without any scheduled meetings with US administration officials.
The lack of a prior invitation led Israeli officials to deny that Netanyahu was being ignored by the US president.
The closed-door meeting between the US and Israeli leaders comes days after Mahmoud Abbas, the Palestinian president, said that he will not seek another term in elections that he has called for January.
Palestinian officials said that Abbas's move on Thursday was due his disenchantment with the US's stance on Israeli settlements.
Call for talks
Hillary Clinton, the US secretary of state, last week moved to clarify Washington's position on the settlements after she called Netanyahu's proposal for the moratorium "unprecedented", during a regional trip.
Those comments were interpreted by many Palestinians as US support for Israel's plan to continue several settlement projects on land that the Palestinians says should form part of a future state.
Clinton later said that that Obama administration still wants a total freeze on all settlement building activity, pending new peace negotiations between Israel and the PA.
Speaking at a forum of North American Jewish leaders in Washington on Monday, Netanyahu said Abbas should immediately renew peace talks, which were broken off in January.
"I say today to Mahmoud Abbas, the leader of the Palestinian Authority, 'let us seize the moment to reach an historic agreement. Let us begin talks immediately'," Netanyahu said.
THe Palestinians called off negotiations as Israeli forces bombarded the Gaza Strip in January and have refused to return to the table with Israeli leaders until they commit to a complete halt to settlement activity.
Ehud Barak, Israel’s defence minister, was also in Washington on Monday for talks with Robert Gates, his US counterpart, and George Mitchell, the US special envoy to the Middle East.