Israel summoned one of its diplomats from the United States on Sunday after he circulated a memorandum accusing Prime Minister Benjamin Netanyahu's government of doing "strategic damage" to ties with Washington.
Israel's Deputy Foreign Minister Danny Ayalon said a disciplinary measure was being taken with the Israeli consul after publication last week of his "very regrettable" memorandum.
"Boston consul general Nadav Tamir has been recalled for consultations so he can clarify how one of his memos appeared in the media," foreign ministry spokesman Yigal Palmor said.
On Thursday, the privately-owned Channel 10 television reported that Tamir had warned the ministry that the refusal of Netanyahu's right-leaning government to heed U.S. requests to freeze settlement activity in the occupied West Bank was harming Israel's most important diplomatic relationship.
"The way in which we are conducting the relationship with the U.S. government is causing Israel strategic damage," he was quoted as warning in the memo.
"While the administration is trying to calm things down, it is Israel that keeps on heating up the rhetoric," he added.
The row over Israel's ongoing settlement activity in the West Bank, including illegal evictions of Palestinian Israelis in annexed Arab east Jerusalem, has brought the Jewish state's relations with its key ally to their lowest ebb in years.
Palestinian President Mahmoud Abbas has said that peace negotiations, stalled since December, cannot resume until settlement activity ceases in the occupied West Bank.
Ayalon said any friction with Washington had declined in the past several months, with frequent contacts between Obama's Middle East envoy George Mitchell, who has been holding talks with Israeli and Palestinian leaders to resume negotiations.
Taking the rare step of dressing down a diplomat publicly, Ayalon told Army Radio no decision had been made as to whether Tamir should be dismissed.
Ayalon said Tamir's document was "not the work of a professional," contained more opinion than data. He called Boston, a liberal bastion, a "bubble," unrepresentative of other U.S. regions where Ayalon insisted support for Israel had grown.
The way in which we are conducting the relationship with the U.S. government is causing Israel strategic damage
Israeli Boston consul general Nadav Tamir
We won't repeat Gaza error: Netanyahu
Netanyahu, who has said he wouldn't build additional settlements but wants to continue construction in existing enclaves to accommodate what he calls natural growth, said Sunday he would not remove any settlements before a peace deal.
Remarking on the fourth anniversary since a Gaza pullout when Israel removed some 9,000 Jewish settlers and soldiers from the Gaza Strip and northern West Bank, Netanyahu told cabinet ministers "we will not repeat this mistake."
Netanyahu said Israel's withdrawal from coastal Gaza had not brought about peace and led ultimately to Iranian-backed Hamas Islamists who reject Israel's existence, to seize control.
Israel has kept up an economic blockade of the coastal territory since shortly after the withdrawal, following Hamas' rise to power after a 2006 election. Palestinians say the policy creates hardship for many of the 1.5 million who live in Gaza.
Some 500,000 Israelis live in the settlements built in occupied territory that is home to some 3 million Palestinians. The World Court has ruled that the settlements are illegal. Israel disputes this.