The senior White House adviser Jared Kushner and the Israeli prime minister Benjamin Netanyahu have discussed reviving the idea of moving the US embassy from Tel Aviv to Jerusalem, according to the Times of Israel.

Kushner, the peace envoy Jason Greenblatt and the deputy national security adviser for strategy Dina Powell met with Netanyahu last Thursday as part of a visit to the region in a bid to re-start the dormant Middle East peace process.

According to a US source, during that meeting the embassy move 'was brought up by both sides as part of a productive broad conversation about a number of issues'.

After months of confusion and speculation, Trump's White House finally ruled out moving the embassy ahead of his state visit to Israel earlier this year.

Back in January, a senior Fatah official said that moving the embassy would 'ignite' the Palestinian people into a new uprising.

'I believe that any American act of stupidity will ignite the Palestinian territories,' the Fatah Central Committee member Sultan Abu al-Einein told Egypt's Alghad TV.

'We must prepare for a confrontation with the new US administration, which has clearly and audaciously declared that Israel and its settlements are legitimate and legal,' he said.

The Palestinian official declared that Washington and Jerusalem 'will bear responsibility for the return of the bloodshed in the Palestinian territories'.

In December, momentum appeared to be gathering behind Trump's proposal to move the embassy after his spokeswoman said it was a 'very big priority'.

According to Israel's Channel 2 TV station, officials were actively looking into possible locations for a new US embassy – including the Diplomat Hotel in the Talpiot neighborhood of west Jerusalem, a privately owned building that is home to 500 elderly immigrants from the former Soviet Union.

In December, Netanyahu said that such a move would be 'great'. He said: 'Regarding the idea of opening the US Embassy to Jerusalem, I will respond to this in one word: Great.'

Kellyanne Conway, a spokeswoman for Trump, said in a radio interview that he 'made it very clear during the campaign' that he wanted to make the move, and that she had 'heard him repeat it several times privately, if not publicly'.

Trump delighted Netanyahu in September by telling him during a lengthy meeting that if he won the presidential election, the US would 'recognise Jerusalem as the undivided capital of the State of Israel'.

While Israel considers Jerusalem its 'eternal, undivided capital', the Palestinians regard the east of the city – occupied by Israel in the 1967 Six Day War – to be the capital of any future Palestinian state.

Critics said that Trump's plan would have effectively ruled out a two-state solution to which the agreed division of Jerusalem would be key.

According to the Times of Israel report, during last week's meeting Kushner told Netanyahu that Trump was committed to help broker a peace deal and thanked the prime minister for working with the White House toward that goal.

'The president is very committed to achieving a solution here that will be able to bring prosperity and peace to all people in this area,' Kushner said. 'We really appreciate the commitment of the prime minister and his team to engaging very thoughtfully and respectfully in the way that the president has asked him to do so.'