Israel is pushing ahead with plans to build 1,300 new apartments for Jewish families in Arab East Jerusalem, the Interior Ministry said on Monday, despite fierce opposition from Palestinians.

The timing of the announcement could prove an embarrassment for Israeli Prime Minister Benjamin Netanyahu, who is in the United States looking for ways to revive Middle East peace talks that have stalled over the issue of Jewish settlement building.

Interior Ministry spokeswoman Efrat Orbach said plans for some 1,300 Jewish housing units in two neighborhoods on land Israel seized in a 1967 war had been made public, passing another procedural stage toward eventual construction.

She said the public could still raise objections to the plans and it could take a long time before building commenced.

"It can take months or years from this point until building can actually begin, or even before tenders for building are issued," Orbach said.

The US said it was "deeply disappointed" by news of the housing project. "It is counterproductive to our efforts to resume direct negotiations between the parties," State Department spokesman P.J. Crowley said, adding that Secretary of State Hillary Clinton was expected to bring the matter up in a meeting with Netanyahu in New York on Thursday.

At a meeting in New York with former President Bill Clinton, Netanyahu was asked by reporters to comment on the US criticism.

"You know, President Clinton and I have a lot of things to discuss, but this particular issue I'm going to discuss, I'm sure, with Mrs Clinton on Thursday, so you can ask me then," Netanyahu said.

Earlier, Netanyahu held talks at the United Nations with UN Secretary General Ban Ki-moon, who the UN press office said "expressed concern at the resumption of settlement activity and recent announcements of further settlement construction in East Jerusalem."

PALESTINIAN REJECTION

Direct peace talks between Israel and the Palestinians broke down in September almost as soon as they had begun, after Netanyahu rebuffed Palestinian demands to extend a partial freeze on West Bank settlement building.

The limited moratorium did not include construction work in areas Israel considers part of Jerusalem.
An aide to Palestinian President Mahmoud Abbas ruled out any return to negotiations as long as Israel continued to build and called on the US to act against the Jewish state so that the talks could restart.

"Israel is continuing to create obstacles ... There will be no return to negotiations while Israel pursues settlement activities," Nabil Abu Rdainah said.

"(Netanyahu) is giving a signal to the Americans that (Israel) will not agree to halt settlements ... We demand that the U.S. administration take practical steps to resume the peace process, there will not be a peace treaty without having East Jerusalem as the capital of (the) state of Palestine," he added.

The State Department's Crowley said the United States was seeking to understand the background to the announcement, and said "it could very well be that somebody in Israel has made this known in order to embarrass the prime minister and to undermine the process."

"This is expressly why we have been encouraging the parties to remain in direct negotiations, to return to direct negotiations and to work through these issues face-to-face," he told a news briefing.

Israel captured East Jerusalem, along with the West Bank, in 1967 and regards all of Jerusalem as its capital. The Palestinians want East Jerusalem as the capital of a state they hope to establish in the West Bank and Gaza Strip.

Source: Reuters