* Clinton says to announce next steps next week
* Palestinians blame Israel for "collapse" of peace talks
* Israel plans new building in, near East Jerusalem
(Adds quotes, background, byline)
By Andrew Quinn
MANAMA, Dec 3 (Reuters) - U.S. Secretary of State Hillary Clinton said on Friday the United States would make new announcements next week on the next steps in the Mideast peace process and she was not ready to declare the process a failure.
"We are not prepared to make any announcement about what we're doing and what our next steps are until early next week," Clinton told Al Hurra television in an interview in Bahrain.
"We're going to have some additional consultations with both the Israelis and the Palestinians. But there are a number of ways that we're going to move forward," Clinton said.
Asked directly if she viewed the process, which a senior Palestinian official said on Thursday had collapsed, as a failure, Clinton demurred.
"We're not ready to say that," she said.
Clinton said earlier that the United States continued to work intensively to relaunch the direct peace talks between the Israelis and the Palestinians which began in September but quickly stalled over the issue of Israeli settlement building.
"I think we've made progress, but it really depends on the parties deciding that they're willing to make the tough compromises on the key issues," Clinton told Al Hurra.
"We have been talking with both parties very substantively, and I think that the United States can play a role to help each make decisions about very difficult matters that then can be presented to the other side."
A senior Palestinian official said on Thursday that the United States should blame Israel for what he said was the "collapse" of the peace process.
NEW BUILDING PLANS
Israeli plans announced on Wednesday to build near East Jerusalem showed that Prime Minister Benjamin Netanyahu did not want to resume stalled peace talks, Palestinian officials said.
"It's time for the American administration to tell the world that Israel holds the responsibility for the collapse of this peace process," chief Palestinian negotiator Saeb Erekat said.
Weeks of intensive U.S. diplomatic efforts to revive the direct talks between Palestinian President Mahmoud Abbas and Israeli Prime Minister Benjamin Netanyahu have failed to produce a breakthrough -- casting a shadow over one of the Obama administration's chief foreign policy goals.
The Palestinians want Israel to stop building on land where they aim to found an independent state, including areas in and around East Jerusalem captured by Israel in a 1967 war.
Abbas and Netanyahu held three rounds of direct talks in September but the Palestinians withdrew from the negotiations three weeks later when a 10-month, partial Israeli freeze on settlement building expired.
Washington has offered Netanyahu a package of inducements to persuade him to extend the moratorium by 90 days, but has not provided the written guarantees Israel wanted to back that up.
Clinton, who was in Bahrain to attend a security conference, urged Arab states to step up their own support of the peace process, and in particular financial support for the fledgling Palestinian Authority as it tries to equip itself to become a full government.
"They are building the institutions necessary for a viable, independent state that can provide security, law and order, and essential services to the Palestinian people," Clinton said.
"This, too, is part of creating the conditions for peace and realizing the Palestinian people's legitimate aspirations, and regional states in particular have a vital role to play." (Editing by Louise Ireland)
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