Amid reports that cease-fire negotiations between Hamas and Israel have fallen through, the U.S. State Department is saying hope still remains for a deal. The State Department also refuted the notion that President Joe Biden's decision to halt some arms transfers to Israel — and his assertion that he will cut off additional shipments if the country invades Rafah — had weakened its position at the negotiating table.

"That is not at all our assessment of the hostage talks. We actually think that a Rafah operation would weaken Israel’s position both in these talks and writ large," State Department spokesperson Matt Miller said, arguing a major incursion would "further weaken Israel’s standing in the world."

Although the paused arm shipments won’t impact Israel’s readiness to conduct a major operation in Rafah, some U.S. officials who have long been skeptical that Hamas will ever agree to a deal that involves handing over all of the hostages say the group could interpret the move (and Biden’s public warning) as a compelling sign that support for Israel among its closest allies is beginning to crumble.

Despite the heightened tensions between the Biden administration and Benjamin Netanyahu’s government, Miller said the U.S. would continue to work with Israel in the hopes of reaching a deal.

"We continue to engage with the Israeli government on the amendments to the proposal that Hamas submitted earlier this week,” Miller said. “We continue to work to try to finalize the text, try to get an agreement. And I will just say that any effort like this is incredibly difficult. This one has certainly been incredibly difficult, but we will continue to stay engaged because we believe it's in the interest of all parties."

-ABC News' Shannon Crawford

Amid tensions between the U.S. and Israel over the invasion of Rafah, Israeli Prime Minister Benjamin Netanyahu said Israel will stand alone if it has to.

"Today we are much stronger. We are determined, and we are united to defeat our enemy and those who seek our souls. If we have to stand alone, we will stand alone," Netanyahu said in a statement Thursday.

"I already said that if we have to - we will fight tooth and nail," Netanyahu said.

Following threats from President Joe Biden to cut off arms to Israel if it launches a full-scale invasion of Rafah, the Israel Defense Forces say they have the armaments they need for operations in Rafah.

"The IDF has armaments for the missions it plans, and we also have what we need for the missions in Rafah. I say this in the context of everything that has come up with the United States and it is important to say it," Daniel Hagari, a spokesperson for the IDF, said Thursday.

"The United States has provided security assistance to the State of Israel and the IDF so far in an unprecedented way during the war, what is no less important than this is the military assistance and cooperation of the American Central Command and the IDF," Hagari said.

Israel's insistence on maintaining its ability to operate throughout Gaza against Hamas was a major sticking point in cease-fire negotiations that have fallen through, a senior Israeli official told ABC News.

The official said Israel will have to operate in Rafah, even if a deal is struck. One of the key problems Israel sees with the proposed deal is the demand for an end to the war when Hamas is still "well established" in Rafah.

-ABC News' Will Gretsky

Hamas says negotiations with Israel for a permanent cease-fire have fallen through after Israel rejected its proposals, including demands for a permanent cease-fire, complete withdrawal of Israel's forces from Gaza, the return of displaced people and a prisoner exchange.

"Israel's rejection of the mediators' proposal, through the amendments it made to it, has brought things back to square one," Hamas said in a statement Friday.

Hamas said Israel bears "the full responsibility" for the failure to reach an agreement.

"The enemy's army's attack on Rafah and the direct occupation of the crossing immediately after Hamas announced its agreement to the mediators' proposal confirms that the occupation is evading reaching an agreement. Netanyahu and his extremist government are using negotiations as a cover for the attack on Rafah and the occupation of the crossing, and continuing the genocide against our people," Hamas said.