Prime Minister Benjamin Netanyahu on Wednesday rejected Western and Arab complaints that the planned construction of 1,100 new homes in Gilo on annexed land close to Jerusalem would complicate Middle East peace efforts.
"Gilo is not a settlement nor an outpost. It is a neighborhood in the very heart of Jerusalem about five minutes from the center of town," Netanyahu's spokesman Mark Regev said.
In every peace plan on the table in the past 18 years Gilo "stays part of Jerusalem and therefore this planning decision in no way contradicts" the current Israel government's desire for peace based on two states for the two peoples, he added.
Netanyahu also stressed the construction approval announced on Tuesday was a "preliminary planning decision."
The United States, Europe and Arab states said the announcement would complicate efforts to renew peace talks and defuse a crisis over a Palestinian statehood bid at the United Nations.
Britain and the European Union called on Netanyahu to reverse the decision, and U.S. Secretary of State Hillary Clinton said new settlement building would be "counter-productive."
The U.S. State Department's number two and three officials for policy, Deputy Secretary Bill Burns and Under Secretary Wendy Sherman, discussed the issue with Israeli Ambassador to Washington Michael Oren on Tuesday, the State Department said.
State Department spokeswoman Victoria Nuland told reporters both meetings were in person but had been previously scheduled, so Oren was not "summoned" to the State Department -- a sign of diplomatic annoyance.
Nuland declined to say whether the United States had been given any advance warning of the construction decision.
Palestinian President Mahmoud Abbas applied at the United Nations on Friday for full Palestinian membership, a move opposed by Israel and the United States, which urged him to resume negotiations with Israel to end the 63-year-old conflict.
Abbas has made a cessation of Israeli settlement building a condition for returning to talks which collapsed a year ago after Netanyahu refused to extend a 10-month partial moratorium on construction.
The so-called Quartet of international mediators -- the United States, the European Union, Russia and the UN -- has called for talks to begin within a month and urged both sides not to take unilateral actions that could block peacemaking.
Saeb Erekat, the chief Palestinian negotiator, said the new housing units Israel wants to build represented "1,100 'noes' to the Quartet statement" urging a resumption of negotiations.
Gilo is a suburban settlement that was erected on West Bank land captured by Israel in the 1967 Six Day War and annexed unilaterally as part of Jerusalem.
Palestinians want to create a state in the West Bank and the Gaza Strip, with East Jerusalem as its capital, and say settlements could deny them a viable country.
The Interior Ministry said a district planning committee approved the Gilo project and public objections to the proposal could be lodged within a 60-day review period, after which construction could begin.
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