As prospects for the extension of the current round of peace talks took a further bleak turn, Israel officially canceled the fourth release of Palestinian prisoners on Thursday, citing an earlier Palestinian push to join international treaties affiliated with the United Nations.

At an overnight meeting Wednesday with Palestinian negotiator Saeb Erekat and US peace envoy Martin Indyk, Israel’s chief negotiator, Tzipi Livni, said that since the Palestinian bid for international recognition came as Israel was finalizing the release, and since the agreement was contingent on Palestinian cooperation, the move to free the inmates had been terminated.

Livni, who is also Israel’s justice minister, stressed that peace talks could not be advanced through unilateral measures, and appealed to the Palestinians to return to the negotiating table.

White House Spokesman Jay Carney said the delay in the prisoner releases “creates challenges” but “the dialogue remains open.”

“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.

“There has been progress in narrowing some of the questions that have arisen as a result of the events of the last few days,” he said.

“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.”

On Thursday, new details emerged of the all-night discussions between Livni and Erekat that yielded no results in restoring the floundering peace talks.

Prior to the meeting, Erekat presented to senior Fatah officials a revised list of preconditions for the extension of peace talks, including official Israeli agreement to the establishment of a Palestinian state along the 1967 lines with East Jerusalem as its capital, the Palestinian Ma’an news agency reported Thursday.

Peace negotiators Tzipi Livni and Saeb Erekat at the State Department in Washington, Tuesday, July 30, 2013.  (photo credit: AP/Charles Dharapak)

Peace negotiators Tzipi Livni and Saeb Erekat at the State Department in Washington, Tuesday, July 30, 2013. (photo credit: AP/Charles Dharapak)

In addition, the list demanded the release of 1,200 Palestinian prisoners including Marwan Barghouti and Ahmad Saadat; a building freeze in East Jerusalem and the West Bank; granting Israeli citizenship to 15,000 Palestinians under a family reunification program; the termination of Israel’s security blockade of Gaza; permission to bar the IDF from West Bank Area A (areas under full PA control) for entrance to arrest or kill terror operatives; and increased Palestinian control in Area C (areas under full Israeli control).

Barghouti is a charismatic Palestinian leader serving several life sentences for the murder of Israelis. Saadat is the head of the Popular Front for the Liberation of Palestine. Both are considered terrorists by Israel.

The new conditions were presented in the marathon meeting, and presumably dismissed by the Israeli negotiators, the news agency report said.

Israel requested a formal retraction of the application bid for the UN agencies. However, Erekat emphasized that Abbas had said he would not retract the bid even if his life depended on it.

Erekat said the Palestinians were expected to be accepted as a member of these agencies within days, and that careful consideration had been given to the move — including having 27 international law experts evaluate the implications.

The Palestinians condemned the Israeli announcement Thursday night. Palestinian Minister of Prisoner Affairs Issa Qaraqe said that “Israel didn’t fulfill the agreement sponsored by the US concerning the release … of prisoners in return for the Palestinian Authority not going to the UN”

Speaking earlier Thursday during a visit to Algeria, Kerry called it a “critical moment” for the peace process and vowed to continue his efforts “no matter what.”

“You can facilitate, you can push, you can nudge, but the parties themselves have to make fundamental decisions and compromises,” Kerry said. “The leaders have to lead and they have to be able to see a moment when it’s there.”

He recalled the old adage that you can lead a horse to water but can’t make it drink.

“Now is the time to drink,” Kerry said. “The leaders need to know that.”