The Israeli delegation, led by Prime Minister Benjamin Netanyahu, threatened to pull out and return home, saying that its security needs were not being met, sparking anger and frustration from the American mediators. They were in full agreement with the Palestinians on security, they said.
The US was preparing to put the text of an agreement to both parties in what amounted to a "take it or leave it" situation. That would put Israel in a highly difficult position, facing the choice of negotiating on a text it deemed unacceptable, or leaving and alienating its only real ally. "The text reflects our best judgement of how to bring this to closure," said Jamie Rubin, US State Department spokesman. "We're at a key moment in the history of the Middle East peace process."
The Palestinians at the talks said that they were broadly happy with the deal proposed by the Americans. But Israeli officials said that they were deeply unhappy, as it would not guarantee their security.
Preparations were under way to move the delegation to Andrews Air Force Base, and Israeli officials said that Mr Netanyahu was ready to go.
Jamie Rubin, the US State Department spokesman, would only say that it was a "critical" moment for the talks, which have been going on for seven days. President Bill Clinton, who convened the talks, has spent 55 hours at the conference centre in rural Maryland.
"The President has spent an enormous amount of time here," said Mr Rubin. But, said Mr Rubin, "It is not at all clear that the tough choices necessary to reach an agreement can or will be made." The President was to decide last night if it was worth returning to bang heads together again.
"We can't make decisions for them" (the summit leaders)," Mr Rubin said. "We're not holding anybody here against their will". But America has warned that a failure of the talks would plunge the Middle East peace process - already widely regarded in the region as dead - into deeper crisis. It has also warned in private that one option would be to accept Palestinian statehood, a step that would rupture relations between Washington and Israel.
The plan set down by the Americans covers a further Israeli withdrawal from 13 per cent of the occupied West Bank, and security commitments by the Palestinians in exchange, to be monitored by the Central Intelligence Agency.
The Palestinians want to go forward to a new Israeli redeployment, which America proposes should take place by next March, and to prepare the ground for a Permanent Status agreement which would cover Palestinian statehood and is due to be agreed by next May.
Israel is reluctant and wants tougher security guarantees.