Israel has approved a plan for 1,100 new homes in an east Jerusalem settlement, in a move the Palestinian leadership said snubs a Quartet proposal for new peace talks.
"The Israeli interior ministry announced that the plan for 1,100 new housing units in Gilo had passed its district planning committee, and will now be available for public objections for 60 days," a ministry statement said.
US Secretary of State Hillary Clinton said the decision is counter-productive to reviving peace talks with the Palestinians.
The project's passage is just one stage of a lengthy, multi-year approvals process for the planned expansion of the Gilo neighbourhood, which lies in Jerusalem's south.
But the Palestinians slammed the move as a rejection of a Quartet proposal for fresh peace talks.
"With this, Israel is responding to the Quartet's statement with 1,100 'Nos,'" Palestinian negotiator Saeb Erakat said, shortly after the approval was made public.
The international peacemaking Quartet on Friday called on Israel and the Palestinians to return to the negotiating table within a month, with the goal of reaching a deal within a year.
They made the proposal shortly after the Palestinians formally submitted their bid for full state membership of the United Nations, over the objections of Israel and the United States.
Mr Erakat lashed out at the Israeli government, saying it was seeking "to destroy the two-state option with its settlement projects and occupation measures".
"We believe that Israel has today responded to the Quartet statement, which called for a halt to unilateral actions by both sides," he said, adding Israel was effectively saying: "We have chosen settlements instead of peace."
Mr Erakat said the approval should be a wake-up call for countries that have opposed the Palestinian bid for UN membership.
"The only way to peace and the implementation of the two-state solution is to support the Palestinian attempt to obtain full membership" at the United Nations, he said.
But Yair Gabbay, a member of the interior ministry committee who also serves as a Jerusalem councillor, described the approval of the new housing in Gilo a step towards protecting the area from "foreign ownership".
"According to the Basic Law (Jerusalem), which is equivalent to a constitution, this area is within the sovereign territory of the State of Israel, and we are fulfilling our duty in making sure it will remain that way, and not be subject to any foreign ownership," he told AFP.
"Jerusalem is not for sale," he added. "It has been, and will always be, the capital of the Jewish people."
Mr Gabbay also said the committee had approved hundreds of housing units in east Jerusalem for Palestinians during the same meeting.
The Quartet's call did not contain any explicit request for Israel to halt settlement building before peace talks resume, despite Palestinian insistence they will not negotiate without a settlement freeze.
Peace talks between the two sides have been on hold since late September 2010, when they ground to a halt shortly after they began, with the expiry of a partial Israel moratorium on settlement building in the West Bank.
Israel declined to renew the freeze, and the Palestinians say they will not hold talks while Israel builds on land they want for their future state, a position repeated by Abbas upon his return from the United Nations on Sunday.
In comments published on Tuesday in the Jerusalem Post, Israeli Prime Minister Benjamin Netanyahu suggested he would not approve a new freeze.
"We already gave at the office," he said, accusing the Palestinians of using settlement construction as a "pretext."
"It is a pretext they use again and again, but I think a lot of people see it as a ruse to avoid direct negotiations," he said.
Israel considers Jerusalem to be its "eternal, indivisible" capital and does not view construction in the east to be settlement activity.
The Palestinians, however, believe east Jerusalem should be the capital of their future state and are fiercely opposed to the extension of Israeli control over the sector.
