Israel has moved ahead with a plan to build a new settlement in the northern West Bank for the first time in 26 years, pursuing a project the United States has already condemned as an obstacle to peace efforts.

The move comes on the eve of Prime Minister Benjamin Netanyahu's first meeting with U.S. President Barack Obama, despite Western calls for Israel to halt its settlement activity.

Tenders have been issued for 20 housing units in the new Maskiot settlement and contractors have arrived on site to begin foundation work.

The initiative began three years ago, under the auspices of then-defense minister Amir Peretz, who promised to transform a former army outpost into a permanent settlement for evacuees from the Gaza Strip. The move was then frozen due to American insistence.

David Elhayani, head of the Jordan Valley regional council that oversees Maskiot, confirmed to Reuters he had issued the tender last week for contractors to launch infrastructure work.

"It's a process that will take months, to prepare infrastructure before we can build. We are proceeding in an orderly fashion," Elhayani said.

Elhayani insisted that the construction is being carried out completely legally.

"There is full consensus among Zionist parties that the Jordan Valley must remain under Israeli control within the framework of any diplomatic deal," he said. "The Jordan Valley is necessary for the sake of national security, and woe to the administration that strays from this path."

Nabil Abu Rudeinah, an aide to Palestinian President Mahmoud Abbas, said the plan was a "message of defiance" from Israel to the Obama administration and its efforts to revive peace talks.

"This Israeli provocation demands a U..S response and a genuine and concrete pressure on Netanyahu that would guarantee a halt to all settlement activities," he said, charging that "continuation [of settlement building] would bring down and destroy the peace process."

"The Palestinian position is clear: There will be no resumption of peace talks as long as settlement building continues," Abu Rudeinah said.

The Peace Now movement called the move proof that "Netanyahu is not ready to commit to a two-state solution" and is striving to "prevent the creation of a Palestinian state."

"The way to do that is to built settlements and make all of us - Arabs and Jews - live in one state," said Peace Now chief Yariv Oppenheimer.

He alleged that settlers had deliberately timed publication of the tenders to focus a spotlight on the controversial issue during Netanyahu's talks with Obama.

The initial settlement plan was drawn up several years ago, Oppenheimer said. "But they brought developers there [Sunday] morning. The timing is significant."

The former U.S. administration of George W. Bush had termed the Maskiot project unhelpful. Washington has pressed Israel since 2006 to halt the project, which it says is in violation of the peace "road map" for a Palestinian state beside Israel.