AMMAN, Jordan – Secretary of State Condoleezza Rice said Monday that Mideast peace talks are “moving in the right direction,” although U.S. officials conceded it would be a hard slog to meet the goal of an Israeli-Palestinian deal in 2008.

Speaking after two days of talks in the region during which she wrung hard-fought but limited concessions from Israel to ease the economic isolation of Palestinians in the West Bank, Rice said more needed to be done and singled out a halt to Israeli settlement as key.

“I think it’s all moving in the right direction,” she said at a news conference in the Jordanian capital after meeting Palestinian President Mahmoud Abbas.

“I fully believe it is a goal we can reach,” she said of the target, agreed to be at the Annapolis, Md., conference in Nov., of reaching a peace agreement that would create a Palestinian state before President Bush leaves office in Jan. 2009.

Abbas expressed similar hope and said he would next meet with Israeli Prime Minister Ehud Olmert on April 7.

Rice’s comments came a day after she won Israeli pledges to lift some restrictions on Palestinian movements. But the steps Israel agreed to, including removing roadblocks and granting more travel and work permits, did not go as far as Washington had hoped.

“It is a start,” Rice said. “It is not the end of what must be done, but it is a start.”

U.S. officials, speaking on condition of anonymity due to the sensitivity of the negotiations, said Rice had wanted Israeli Defense Minister Ehud Barak to go much further in reducing restrictions on Palestinians and would continue to press hard for him to do so.

Of equal concern to U.S. officials were announcements Monday by Israeli officials, shortly after Rice left Jerusalem, of plans to build 1,400 new homes on land the Palestinians claim for a future state.

At the same time, a liberal Israeli group, Peace Now, reported that Israel has approved plans to build 946 homes in the West Bank and at least 750 homes in east Jerusalem since the Annapolis conference.

“Settlement activity should stop, expansion should stop,” a grim-faced Rice told reporters in Amman when asked about the new construction plans, seen as crucial to keeping Olmert’s coalition together by placating ultra-Orthodox parties.

Olmert denied that West Bank building had been stepped up in violation of commitments to halt new settlement activity and expand settlements only in east Jerusalem and heavily Jewish West Bank areas. “It’s not true,” he told a meeting of his Kadima Party.

But the Palestinians say construction on contested land is the greatest obstacle to peace. Palestinian negotiator Saeb Erekat condemned the construction plans and appealed to the Americans to intervene.

The U.S. has been urging Israel to halt construction in east Jerusalem and the West Bank, areas that Israel captured in the 1967 war but are claimed by the Palestinians for a future state.