Israeli officials announced plans yesterday for 1,400 new homes in East Jerusalem and nearby settlements, just hours after U.S. Secretary of State Condoleezza Rice completed her trip to the region.

During a tour of the ultra-Orthodox West Bank settlement of Betar Illit yesterday, Shas leaders said that Prime Minister Ehud Olmert had promised to thaw frozen construction plans in all the settlements near Jerusalem. In particular, they said, Olmert promised to lift a marketing freeze on 800 homes in Betar Illit in the next few days, and to enable construction or marketing of hundreds of additional nearby homes in the next few weeks. Olmert made the promise to Shas spiritual mentor Rabbi Ovadia Yosef, the party's Knesset members said.

In addition, Jerusalem's city hall announced yesterday that it would build 600 new apartments in Pisgat Ze'ev, a neighborhood in the capital's eastern sector.

Nevertheless, Olmert's pledge did not completely satisfy Shas: The party's chairman, Industry Minister Eli Yishai, said that he was displeased with its timing. Yishai said that making the announcement a day after the United Torah Judaism party visited Betar Illit embarrassed Shas.

"Olmert could have said 'yes' two weeks ago. Why humiliate us in front of UTJ and the ultra-Orthodox community?" a Shas MK said.

Earlier yesterday, during a meeting of his Kadima faction at the Knesset, Olmert denied a report by the Peace Now movement claiming that Israeli construction in the West Bank had been stepped up. That report, which was released yesterday, cited expansion in 101 West Bank settlements, including at least 500 buildings containing dozens of apartments each.

"All the reports of dramatic construction projects in the territories are not true, and it's not true that we're building in violation of commitments that were made," Olmert said.

However, he added, Israel would continue to build in East Jerusalem and in heavily-populated Jewish areas of the West Bank that Israel wants to keep in a final peace agreement.

"This is going on within the framework of negotiations, and the negotiations will continue to progress," he said. "There is no need to announce every two days that neighborhoods in Jerusalem will continue to be built, and that we are not going to leave the settlement blocs."

Meanwhile, the Yesha Council of Settlements said yesterday that it would continue to build in West Bank settlements even without the necessary government authorizations.

"Whoever thinks that an administrative move can smother the settlement enterprise and prevent it from flourishing is mistaken," the council said in statement. The statement came in response to the Peace Now report.

That report, which covers the first quarter of 2008, accused the government of stepping up Jewish construction in East Jerusalem at an unprecedented rate. It also said that Defense Minister Ehud Barak recently approved plans to construct at least 969 housing units in settlements, including 750 in the Agan Ayalon neighborhood of Givat Ze'ev and 48 in Ariel.

The report also noted that at least 184 new caravans have been installed in West Bank settlements, 83 percent of them east of the separation fence.

According to the report, since the Annapolis Summit last November, tenders have been issued for the construction of 750 housing units in East Jerusalem, compared to two tenders for 46 units in the first 11 months of 2007.

The construction comes despite the recently revived peace process and Barak's pledge to ease conditions for Palestinians in the West Bank, it said.

Peace Now's findings were disputed not only by Olmert, but by Likud Chairman Benjamin Netanyahu. The opposition leader said yesterday that in practice, all construction east of the Green Line has been suspended.

"We must make it clear that this is not just West Bank settlements, but a halt to construction inside Jerusalem," he told a Likud faction meeting. "The government isn't only halting construction in Jerusalem, but negotiating over the city's division and ensuring Palestinian settlement in the capital."

He urged Shas to quit the government. "I ask again, what are you doing in this government that is now discussing Jerusalem's division? Do the right thing and quit the government."

Ma'aleh Adumim Mayor Benny Kashriel told the meeting: "Never has an Israeli government caused as much harm to Jerusalem's residents as this one. The government is being dishonest and spreading lies in the media, saying construction has not been frozen. The Arabs are allowed to build, but the Jews aren't."

The Jerusalem municipality's decision to build hundreds of homes in the capital must still be approved by the regional Planning and Construction Committee. If it is, the Housing Ministry will then have to issue tenders for the construction.

The ministry had previously halted tenders for construction in East Jerusalem, following the international outcry two months ago over a tender to build 300 homes in Har Homa. But Jerusalem Mayor Uri Lupolianski said he saw no problem with expanding construction in the capital's eastern sector, including Pisgat Ze'ev, Neveh Ya'akov and Har Homa.