Jerusalem: Reported Israeli plans to build 238 new settler homes in east Jerusalem provoked a furious response on Friday from the Palestinians who said Israel was bent on "killing" peace talks.
Washington expressed "disappointment" at the move, which was likely to complicate US efforts to revive stalled direct peace negotiations.
The plans for new housing in the settlement neighbourhoods of Pisgat Zeev and Ramot were approved on Thursday by Prime Minister Benjamin Netanyahu, Ynet news website said.
Palestinian chief negotiator Saeb Erakat said it proved Israel was intent on "killing" every opportunity to revive peace talks between the two sides.
"Netanyahu has made his choice: settlements over peace," he said.
"We call upon the US administration to hold the Israeli government responsible for the collapse of the negotiations and the peace process as a result of this government`s insistence on killing every opportunity for resuming negotiations."
State Department spokesman Philip Crowley told reporters in Washington: "We were disappointed by the announcement of new tenders in east Jerusalem yesterday. It is contrary to our efforts to resume direct negotiations between the parties."
Direct talks face imminent collapse in a row over settlement building on occupied land, which resumed on September 26 after temporary restrictions expired.
Although the 10-month freeze did not cover east Jerusalem, Netanyahu had quietly avoided signing off on any such projects to avoid the political fallout, Ynet said.
Settlement watchdog Peace Now said it was the first time such a plan had been approved since March, when Israel said during a visit by US Vice President Joe Biden it would build 1,600 new settler homes in east Jerusalem, prompting a major crisis with Washington.