MK Yisrael Katz (Likud) has submitted a bill calling on Israel to annex the Jordan Valley, in response to Defense Minister Amir Peretz's decision to freeze a controversial plan to establish a new settlement there, Israel Radio reported Friday.

Imposing Israeli sovereignty on the Jordan Valley is the solution to Peretz's waffling, Israel Radio quoted Katz as saying. He said the Jordan Valley is Israel's eastern security zone and must be strengthened and settled.

Peretz retracted his approval of the construction of 100 housing units after the December announcement of a new settlement, Maskiot, sparked criticism from the United States and Europe as well as Peretz's fellow Labor Party members. Now he faces criticism from the Israeli left and right for failing to set a consistent policy on settlements.

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A Defense Ministry representative informed the Jordan Valley regional council Thursday that the construction was suspended until further notice, Israel Radio reported. It had been slated to begin in a few days.

The housing, which was going to be used for families from the evacuated Gaza settlement bloc of Gush Katif, would have made Maskiot the first new settlement in more than a decade.

"Peretz is trying to win political gains at the expense of the evacuees," the Gush Katif Settlers Council said Friday. "The defense minister is doing everything to prevent the rehabilitation of the people of Gush Katif and their return to a normal life."

Dubi Tal, head of the Jordan Valley regional council, said he would appeal the decision to Prime Minister Ehud Olmert. He told Israel Radio on Friday that Peretz's decision demonstrates that the upcoming Labor Party primaries are more important than settling the Jordan Valley.

Dror Etkes, coordinator of Peace Now's settlement monitoring division, said Peretz's reversal shows that the government is incapable of formulating a long-term policy on the settlement issue.

"Peretz's zigzagging in the Maskiot case reflects the confusion on the political level, which reacts to pressure - one time from the settlers and one time from the world - but does not formulate an organized policy on the matter," he said.

Shortly after the construction was publicized, the U.S. State Department condemned the decision, and foreign embassies in Israel, including those of European Union countries, demanded clarifications from the government.