President Obama has abandoned a two-year policy of trying to persuade Israel to stop some settlement construction as a condition for negotiations with the Palestinians, a major recalibration of the administration's strategy for brokering a deal for a Palestinian state.

U.S. officials began telling reporters about the shift in strategy Tuesday after remarks from Israeli Defense Minister Ehud Barak revealing that the Obama administration had stopped asking Israel to commit to a three-month settlement construction freeze, citing in part distractions caused by the WikiLeaks crisis.

The strategy shift comes after nearly a month of hard-fought negotiations between Israel and the United States over the settlement moratorium. Palestinians have long complained that the construction is a pre-emptive move by Israel to redraw the boundaries of their prospective state even before talks have begun...