Deputy Foreign Minister Danny Ayalon on Thursday defended Israel's decision to approve construction of 1,600 new housing units in East Jerusalem, saying sovereignty over the capital has never been negotiable and that Israel would not make any more concessions for peace.

"There is no doubt that the Palestinians will try to use this to either stop the upcoming indirect peace talks, or to extort more concessions from us, and I have explained to U.S. government officials that there will be no more concessions," said the deputy minister.

According to Ayalon, the United States' condemnation on the matter was due to the timing of the announcement and not the content of the issue.

Israel declared its approval of the construction just 24 hours after U.S. envoy George Mitchell announced that Israelis and Palestinians had agreed to begin indirect peace talks and in the midst of a visit to the region by U.S. Vice President Joe Biden.

"We were severely criticized by the State Department," Ayalon told Haaretz during a visit to Washington. "I explained that Jerusalem has always been out of the question."

"The criticism was mainly about the timing of the announcement, and I told them that it was poor timing, but it was not planned and it was a serious mistake which is currently being probed in Israel," Ayalon told Haaretz.

Ayalon said that despite the uncomfortable diplomatic circumstances he has found himself in due to the issue, his visit to Washington has been "essentially good" and has allowed him to reach "concrete achievements."

Biden issued his Israeli hosts with a sharp rebuke upon hearing that the East Jerusalem construction had been approved. Prime Minister Benjamin Netanyahu said he was not informed in advance of the decision, announced by the interior ministry.

The prime minister summoned Interior Minister Eli Yishai Wednesday morning and reprimanded him for the decision's "wretched, displaced, insensitive" timing.

The 1,600 homes will be built in Ramat Shlomo, an ultra-Orthodox neighborhood in northern Jerusalem, near the Palestinian village of Shuafat.

The neighborhood lies within the municipal boundaries drawn up by Israel after it annexed East Jerusalem following its capture in the 1967 Six-Day War.

Chief Palestinian negotiator Saeb Erekat said earlier Thursday that Palestinians would not begin indirectpeace talks unless the Israeli government annuled the decision to build in East Jerusalem.

"We want to hear from [United States envoy George] Mitchell that Israel has canceled the decision to build housing units before we start the negotiations," Erekat said.

His remarks follow comments by Palestinian President Mahmoud Abbas, who told Biden Wednesday that it was not enough for the Israeli decision to be condemned, it also had to be canceled.