U.S. Secretary of State Hillary Clinton and Defense Secretary Leon Panetta both slammed Israel over the weekend, with Clinton accusing the country of being undemocratic, and Panetta blaming its isolation in the region.

Clinton made the comments during a closed-door session over the weekend at an annual seminar, sponsored by the Brookings Institute, examining the U.S.-Israel relationship, Israel Hayom reported.

A senior U.S. official, who spoke on condition of anonymity because Clinton's remarks were considered off the record, confirmed that the secretary of state had expressed concerns about developments in Israel, including a recent law limiting funding from foreign NGOs, and recent comments from conservative politicians.

She was also reported to have criticized what she sees as the increasing exclusion of women from the Israeli public sphere, specifically referencing an incident in which religious male IDF soldiers walked out of a ceremony where females were singing, and the gender-segregated buses that serve some of the country's most ultra-Orthodox communities. Clinton told the audience that the incidents reminded her of Iran and the U.S. Civil Rights Movement of the 1960s, respectively.

Israeli press reported that Clinton criticized a recent wave of legislation in Israel that critics say are aimed at stifling dissent. Israeli media did not provide quotes or a detailed summary and the State Department has said it will not release a transcript of Clinton's remarks.

Recent controversial legislation includes a bill that restricts foreign funding for left-wing non-governmental organizations and a draft bill that would make it easier for journalists to be sued.

Israeli critics of the legislation say the bills are an attempt to stifle dissent among dovish groups in the country and muzzle the left-wing against the hawkish government. Supporters say the bills would stop foreign interference and demand accountability in the media.

While the Prime Minister's Office and the Foreign Ministry did not issue reactions, several MKs expressed criticism over Clinton's remarks.

Finance Minister Yuval Steinitz said Clinton's comments were "absolutely exaggerated."

"The issue of the separation of women and attempts to prevent them from participating is unacceptable and must be stopped," Steinitz said after the weekly cabinet meeting Sunday, but, he added, there is a large gap between this issue and the claim that it threatens Israeli democracy. "Israeli democracy is alive, breathing, kicking and liberal," he stressed.

Meanwhile, U.S. Defense Secretary Leon Panetta on Friday urged Israel to "reach out and mend fences" with Turkey, Egypt and other security partners in the Middle East, and to restart peace negotiations with the Palestinians, saying he is troubled by the Jewish state's growing isolation in the increasingly volatile region, according to Israel Hayom.

"This isolation is due to a number of factors," Panetta said. He said there is an international campaign underway to isolate Israel, and that U.S. President Barack Obama has "stood steadfastly in the way of that effort, especially in the United Nations." Panetta said he had been working with Defense Minister Ehud Barak and others "to find ways to help Israel take steps which are profoundly in its interests."

Panetta urged Israeli leaders to "reach out and mend fences with those who share an interest in regional stability" – countries such as Turkey, Egypt and Jordan. "This is not impossible," he said. "If the gestures are rebuked, the world will see those rebukes for what they are. And that is exactly why Israel should pursue them."

Panetta also addressed the stalled peace talks between Israel and the Palestinians, and pressed Israeli leaders to do more to restart negotiations, imploring them to "just get to the damn table." Direct peace negotiations between Israel and the Palestinian Authority broke down in late September 2010 when Israel's 10-month moratorium on settlement construction in the West Bank expired.

Panetta urged Israel to "lean forward" to achieve peace with the Palestinians. "Rather than undermining the Palestinian Authority, it is in Israel's interests to strengthen it by … continuing to transfer Palestinian tax revenues and pursuing other avenues of cooperation," he said.

A spokesman for Prime Minister Benjamin Netanyahu on Saturday responded to Panetta's assertion that Israel is not doing enough to return to negotiations by blaming the Palestinian leadership for the deadlock in peace talks.

The Palestinians are "playing diplomatic games to try to cover their position, which is to boycott Israel and to refuse to enter negotiations," spokesman Mark Regev said. He added that Israel remains prepared to resume peace talks without preconditions.