British Foreign Secretary William Hague said on Tuesday that European sanctions against Israel in response to its latest plans to build more settlements on disputed land were not an option, but said further steps would need to be considered if the expansion plans were not rescinded.

Hague told parliament that he was in talks with other European foreign ministers about formulating "incentives and disincentives" to support U.S. efforts to bring Israel and the Palestinians back to the negotiating table.

Israeli Prime Minister Benjamin Netanyahu decided to expand settlement building after the United Nations' de facto recognition of Palestinian statehood last week, and has brushed off international criticism of the move.

The land Israel plans to build on is seen as essential for a contiguous Palestinian state as envisaged by the internationally backed two-state solution to the Israel-Palestinian conflict.

"I don't think there is enthusiasm around the European Union…about economic sanctions in Europe on Israel. I don't believe there would be anywhere near a consensus nor is that our approach. We continue to try to bring both sides back to negotiations," Hague said.

"Nevertheless, if there is no reversal of the decision that has been announced, we will want to consider what further steps European countries should take," he said.

The United States, which had been lobbying with Israel to prevent the UN vote, responded cautiously to the Israeli response, saying neither the Palestinian nor Israeli actions would help advance a two-state solution.

"We don't want to see this kind of response from Israelis, but we warned about it Palestinians pursuing this vote. These are difficult issues and difficult process, but we need to be clear that these kind of actions (UN bid and the settlement expansion) do not get us any closer to the two state solution," said State Department deputy spokesman Mark Toner.

Britain, France, Sweden, Denmark, Spain on Monday summoned the Israeli ambassadors to their countries to express their condemnation of Netanyahu's decision, and on Tuesday, Australia, Brazil, Ireland, Finland and Egypt followed suit. Russia also issued a statement on Monday urging Israel to refrain from expanding settlements.

The Dutch ambassador, whose country abstained in Thursday’s UN vote on Palestinian nonmember state status, told Israeli Foreign Minister Avigdor Lieberman that if the E-1 construction went forward, his country could not support Israel in future UN votes. The German deputy ambassador conveyed a similar message.

Haaretz reported earlier Monday that both Britain and France were poised to take action over the matter − possibly including the unprecedented step of recalling their ambassadors, according to senior European diplomats.

There was no confirmation of specific action to that regard. France on Monday dismissed the prospect of European sanctions on Israel.