The Israeli Prime Minister, Mr Ehud Barak, attempted to shrug off the fiasco as "a misunderstanding" and a "technical glitch".
Palestinian officials characterised it as "infuriating" and as "a misguided effort" to pressurise the Palestinian President, Mr Yasser Arafat, into new compromises.
But perhaps the best way to view the current state of the Israeli-Palestinian peace effort, as reflected in the contradictory stream of announcements from Mr Barak and his various aides over the past couple of days, is as a particularly heavy-handed farce.
Mr Barak's envoy, Mr Gilad Sher, did in fact hold talks yesterday with Mr Saeb Erekat, the senior Palestinian negotiator but they made absolutely no progress. And Mr Barak still isn't absolutely sure whether their meeting constituted "negotiations" at all.
The latest instalment of the long-running peace talks saga began at 4.30 on Tuesday afternoon, when the Prime Minister's office announced the cancellation of that day's scheduled session between Mr Sher and Mr Erekat. An hour later, Mr Barak's righthand man, the failed ex-Mossad chief, Mr Danny Yatom, upped the ante, declaring that Israel was now taking an open-ended "time out" from peace talks.
An hour after that, angry US and Palestinian reactions began to arrive, and Mr Barak stepped in personally.
But his statements only complicated the picture. The talks had not been cancelled, he said at one point, because there had not really been any negotiations at all in the weeks since the Camp David peace summit. Yes, he allowed, there were "ongoing contacts". But until Mr Arafat showed a willingness at least to discuss various US compromise formulas for resolving the disputed status of Jerusalem, there was, said Mr Barak, nothing to negotiate.
So when might Mr Sher and Mr Erekat resume their "non-negotiations"? Confusion reigned until, a little after 9 p.m. on Tuesday, a spokesman for the Prime Minister declared that the talks would resume on Wednesday - yesterday. A few minutes after that, the same spokesman "clarified" that the talks had never been broken off in the first place, even though Tuesday's session had not taken place as scheduled.
Confused? So were the Palestinians and the Americans.
Mr Arafat gathered his colleagues in Gaza for a strategy session late on Tuesday night, and there were suggestions that the Palestinians might now boycott the talks. But they opted merely to accuse the Israelis of "playing games".
Meanwhile, in Washington, where the need for a permanent peace deal sometimes appears to be more keenly felt than in the region itself, Mr Clinton is today to hold a second meeting of his aides, to hammer out yet another position paper, designed to engineer a breakthrough. For if one thing is clearer than ever after the latest shenanigans, it is that, without US intervention, the two sides are quite incapable of making headway.
An Israeli soldier was slightly wounded yesterday by a bottle thrown across the border with Lebanon near the Fatima Gate crossing point.