Binyamin Netanyahu's order Tuesday followed his instruction, earlier in the day, to freeze construction on about 1,200 housing units in the E1 area that links Ma'aleh Adumim to Jerusalem.
Netanyahu said Housing Minister Uri Ariel's announcement of preliminary plans to issue building tenders for West Bank settlements would create an unecessary conflict with the international community while efforts are under way to get an agreement with Iran on its nuclear program, The Jerusalem Post reported.
The prime minister's office said Ariel agreed to reconsider the plans.
Palestinian President Mahmoud Abbas threatened to call off peace talks with Israel after he heard of the construction plans, an unidentified senior Palestinian official told Haaretz.
Palestinian negotiator Saeb Erekat said the P.A. had informed Russia, the European Union and the United States of Israel's housing plans.
The West Bank and E1 plans had been revealed early Tuesday by Peace Now, which monitors settlement housing. Haaretz said the construction would cost about $13 million.